Is This Really A Good Time To Invest In A Home? It Depends.

Mortgage interest rates continue to rise, but home values are beginning to drop. Home investors and buyers, frustrated by a lack of inventory earlier in 2022, are now seeing more homes hit the market. So, should buyers seriously consider purchasing a home in this economic climate? The answer is maybe for some buyers and probably not for others. 

A recent Fannie Mae survey has shown that buyer pessimism rules the real estate investment world today, with over 60% expecting mortgage rates to keep surging and feeling worried about job stability and the possibility of escalating housing prices. It’s not surprising to find that only 16% believed that now was a good time for real estate investment. 

The good news is that home prices are starting to go down in 98 out of 148 major regional housing markets and as any investor will tell you, buying real estate when the price is falling is what made a lot of people very wealthy after the last recession. But the difference today is that home mortgage rates are now over 7%. 

Buying a home in bad economic times is not something people of means are worried about because they have cash and are shopping for deals. Also, if you can afford a payment on a 15-year mortgage, you’ll be in much better shape. You definitely don’t want a 30-year mortgage in this climate. Other considerations include whether you’re planning on living in the property for more than five years and whether your payment will be less than 30% of your income, a typical measurement for those practicing good economics and mortgage companies evaluating risk.

One group that should avoid buying a home in this climate: first-time home buyers. That’s according to Realtor.com, which believes not only will it be hard to find a home suitable for their income level today, but a shaky job market makes it a potentially long-term financial risk. Realtor.com even told first-time home buyers they “might be better off giving up, at least for now.” 

Detractors to this gloom and doom say the best time to buy a home could be right now. A new analysis from national real estate and property data company ATTOM says it’s seasonal. “We took a look at what people pay for properties relative to list prices at various times of the year and the lowest premium over list price tends to happen in the fall and winter months,” Rick Sharga, executive vice president of market intelligence at ATTOM, said. 

Sharga also said that the usual patterns of home buyers shopping after school lets out have shifted since the pandemic. “After losing the spring and summer home-selling season in 2020, we saw a lot of unusually strong home sales in the latter half of the year.”

Your job situation, cash availability, interest rate, length of mortgage, time of year and your age are all factors that need to be considered before you jump into this volatile home market.

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