6 Things to ask yourself before buying in today's market
Today's market is competitive. For a few years now, buyers have had to purchase significantly over asking to secure a home... in addition to waiving all contingencies and taking a home "as is."
That drives us to a very important question many buyers and even sellers ask. Is now a good time to buy a house?
Find out what the top six questions you want to ask yourself before purchasing a home this year.
How long are you looking to live in the home?
Are you looking to stay for five years? Maybe this is your "forever" home, and you are ready to settle down for the next 30 years.
The National Association of Realtors says to "break even" with selling costs and mortgage interest, you want to live in a home for about five years before you sell. The longer you stay, the greater the odds of making money.
Gross income to cost of housing?
Nobody wants to be house poor. For most people, 28% of their gross income goes towards housing. Going above 28% leaves you vulnerable to outside factors and won't leave you a lot of money at the end of the day for additional life costs and fun.
How much towards your down payment?
Many people are under the impression you MUST have 20% down to purchase a home. That is actually incorrect. You need 25% down for an investment property, which might be where the mixup comes in. There are programs available for as little as 3% down, but what many people don't take into account with smaller down payments is the PMI (primary mortgage insurance). When you put down less than 20%, you will have something called PMI, which will tack on a few extra hundred dollars a month to your mortgage payment. There are a few ways to remove PMI after you purchase a home, but go for it if you are currently in a place and can put down more than 20%.
Side note on down payments: earnest money deposit and down payment are two significant factors sellers and listing agents are looking at to select specific offers. More down, more secure.
Do you need to buy a home?
Tomorrow might be the perfect time to purchase a home. For some, buying now is not a great decision, but that can be said during any time, not specifically now.
Supply and demand have been a significant issue in our market for a few years now. Going back to 2016, we dealt with low-interest rates and multiple offers. It cooled off for a few years, and pre-pandemic interest rates still had people buying up homes.
Inflation will continue to increase, along with rental rates and mortgage rates. We are seeing a slight slow down in purchasing. Still, our demand is high, and EDAWN (the people in charge of getting Tesla here) has no plan to stop bringing jobs and businesses into our area.
Be patient. If your dream home comes on the market and you can afford it, but it's a bit outside of your "dream price," don't pass it up.
Are you ready for a fixer or want move-in ready?
If there is a word I hate most in real estate, it's Supply Chain. We get it... you are behind, and we have issues getting items. Contractors are busier than ever, but we are still behind on new construction and affordable housing.
It's not like HGTV, things take time, and deadlines are being pushed out more than ever before.
Take your time before you decide to take on a big home project and iron out all budgets because what you see on tv is not reality.
Owning and investing in real estate to build future wealth and financial security is a smart long-term move. That doesn't mean that there are other ways to build wealth.