Should I Wait Until Next Year to Buy a Home?

Given the current state of the real estate market, when should you buy a home? We won't argue with you that this market is confusing given all of the changes that seem to be happening on almost a daily basis. If you're buying considering buying, you want to save money but still have your pick of lots of property for sale. Confused? That's because this is a market where you really need to think about home affordability before making a decision.

Working with an experienced agent - especially one who has navigated downturns in the market before - will be a definite benefit as you break down how home affordability applies to your specific city, neighborhood, etc. Here are a few things we'd recommend you consider:

What We're Experiencing is a Correction to The Pandemic Housing Boom 

Beyond all other factors, when you consider home affordability, you have to focus on the changes brought by the pandemic. Suddenly, people were buying homes quickly, and due to the limited number of homes listed for sale on the market, the laws of supply and demand took over. That led to rapidly increasing home prices. The double-digit home price growth of the last few years isn't something the market can sustain. If you're tired of being outbid for a home you love, that could soon be a thing of the past, depending on location and price range.

You've probably noticed that to combat the sudden rise in home values and inflation, the Federal Reserve boosted the key lending rate, which is likely to lead to an increase in mortgage rates for some time. That may sound frustrating to you as a home buyer, but there are some key benefits to it.

What Will Home Affordability Look Like in 2023?

The Fed's goal is to curb inflation quickly. And a result of that could include some improvements in overall home affordability. There’s no way for us to know exactly what could happen next year, but here’s what many expect:

• Interest rates: Many anticipate that interest rates on most mortgage loans will likely be higher in 2023. That means you may spend more to buy the home when it comes to the loan costs. That doesn’t mean those prices are going to be significantly higher, but it could mean a few percentage points which does add up over time.
• Home inventory: Inventory is predicted to become more stable in most areas. With more inventory available, it's less likely that home values will skyrocket in those bidding wars everyone has become accustomed to the last year or two. Essentially, more inventory means more options for you as a buyer and sellers who are more likely to make concessions.
• Home prices: It’s unlikely there will be a significant housing value drop in the coming year, but home values may stop growing as quickly. We are seeing an increase in the number of price reductions here in North Texas, which could mean lower prices in some areas.

Will You Be Able to Afford More House Next Year, Though?

There’s no crystal ball to tell us the future of what’s to come. But if we had to consolidate all of this information into one concise piece of advice for you, we'd say: If you can afford to buy a home today that fits your needs and is within your budget, buy now. 

With mortgage rates on the rise, there’s no doubt that buying now if you qualify for a lower interest rate is the better option overall. It will save you money to secure even an interest rate that's even a fraction lower this year than next year. 

If you can afford to buy a home now and have the financing to do so, we can't give you a major benefit of waiting until next year. Inventory may be a bit better, but prices aren't likely to be much lower. 

Most of all, we'd encourage you to work with a real estate professional who is an expert in the market you are looking to purchase in so that you make the best investment possible.