With mortgage rates rising, low inventory, and intense buyer competition, you may be wondering if it makes sense to wait and see if the market shifts in your favor before buying.
It certainly has not been fun or ideal for buyers, so if there is a chance you could have more houses to choose from at a better price, who could fault you for wanting to wait?
The problem is, there is no crystal ball you can look into and see if and when the market will change, and in what way, so the only thing you can truly do is weigh the pros and cons of waiting. So let’s look take a look at both sides of the coin for 3 things you might be thinking about to help you decide:
Interest Rates Are Getting Higher
Interest rates are certainly higher than they have been in years. That is causing your monthly payment on a house (which you could have bought for the same price a few weeks ago) to be higher — or worse, even causing you to have to look at houses in a lower price range.
Pro for waiting: If you wait, interest rates may come back down.
Con for waiting: On the other hand, they may just continue to go up further.
Keep in mind interest rates are still at historically low levels. If rates go back down substantially, you can always refinance at some point.
Home Prices May Come Down
There is buzz (and maybe even some hope) that we might see a crash or bubble burst, much like we did back in 2006, causing prices to come down and allowing you to get a better deal on a house.
Pro for waiting: If the market crashes and you are in good financial shape to buy a house in those market conditions, then you could get yourself a house for a better price than you could right now.
Con for waiting: According to this Time article, and many other sources, the current market differs considerably from the ‘06 market, and a crash is not as likely. Prices may just level off, or go down slightly, but the increase in interest rates may end up costing you more.
While the real estate market always fluctuates, and home prices will at some point take a dip, it is hard to say how much of a dip or when they will bottom out. It is an age-old gamble every buyer wrestles with no matter when they are buying.
Buyer Competition May Cool Down
There have been some hints that buyers are “cooling off” due to the intense competition, low inventory, and rising rates. If that is the case, then it stands to argue that waiting a while may lead to even more buyers taking a step back.
Pro for waiting: If enough buyers leave the market, it could cause prices to go down due to lower demand and competition. It could also give you a chance at buying a house without getting into a bidding war.
Con for waiting: There has been so much demand for the amount of houses for sale, and there are not a lot of projections that listing inventory is going to increase. So it will likely take a lot of buyers taking a break for there to be a significant change in the market.
Another way of thinking about it is that if you are “waiting”, you are essentially part of the group of buyers who are stepping back, so you are not even in the mix to buy a house if things do change.
The Takeaway:
There is no clear cut answer for whether or not it makes sense for you to wait for the market to shift in your favor. For every reason to wait, there is as much of a reason not to wait. So go by how you feel when weighing the above pros and cons. Which one worries you more? That is a good sign as to what you should do.
But since real estate markets vary on a local level, you should also chat with a Real Estate Advisor | REALTOR® from DFWREAdvisors to get a sense of where the market is heading in your area. And if you share your thoughts and concerns with us, we can also be a great sounding board and help you weigh the pros and cons for your personal situation.
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