Home values are soaring — and buyers are struggling as a result.
Buyers today are struggling to purchase homes for a couple of reasons. First, there’s just not enough supply. Also, home values have skyrocketed over the past year, and a lot of buyers are finding themselves priced out of markets that would normally fall within their financial reach.
In fact, national home prices increased 11.3% year over year in March 2021, according to the latest CoreLogic Home Price Index Report. That represents the highest gain in 15 years — and explains why so many buyers are struggling.
Should you buy today, or wait things out?
Low inventory and increased home values go hand in hand. When any commodity is in short supply and demand increases, prices tend to soar, and that’s exactly what’s happening in the housing market.
If you’ve been trying to buy a home, you may be quite frustrated by now. So should you continue pursuing a home, or put it on pause and ride things out?
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There are pros and cons to both options. The upside of continuing to look for a home now is that mortgage rates are very competitive, and we don’t know what they’ll look like in the future.
The downside of looking for a home now? You might spin your wheels trying to find something within your budget. Or you may be tempted to make an offer that’s over your budget, forcing you to take on a higher mortgage than you’re actually comfortable with.
If you wait a few months to look for a home, you may benefit from an uptick in inventory. As things improve on the pandemic front, more sellers may list their homes, and once there’s more inventory, prices should come down.
Since we don’t know what mortgage rates will look like three, five, or seven months from now, if you delay your home search, you risk getting stuck with a higher rate. That said, mortgage rates aren’t expected to explode this year — the general consensus is that they should stay reasonably low through 2021. By delaying your home search, you’re not necessarily taking a big risk on mortgage rates — and you may find that by paying less for a home, you come out ahead financially even with a higher rate.
Ultimately, the decision to pause a home search or forge ahead is an individual one. Either way, don’t get in over your head by taking on too expensive a home.
Right now, home price gains are at a 15-year high. That doesn’t have to deter you from buying, but if the homes you see are out of reach financially, holding off may be the better option — remind yourself that good things really do tend to come to those who wait.