Is Now the Time to Buy a House?
Understanding the Housing Market
The housing market works just like a supply and demand market. Supply in the housing market means there are a plethora of houses on the market ready for purchase. Demand means the number of homes available for sale is limited. The housing market constantly changes, and it’s essential to understand your market, whether buying or selling property.
Difference Between Sellers Market & Buyers Market
As we talked about previously, buyers and sellers control the housing market. Understanding the difference between these two is important to know how to approach buying a house. When we talk about a buyer’s market, we mainly focus on a higher supply and lower demand for homes. A seller’s market means that there’s a lower supply and higher demand for homes in the current housing market.
When there is high demand, or lots of buyers looking to purchase a home but supply is low, this creates a seller’s market. Sellers have the advantage because they control the purchase and terms agreed upon in selling their home. For example, imagine you have a home and put it on the market, ready to sell for $400k today. The next day you’re sent multiple offers from buyers on the sale of your house. 1the first offer you received says they’ll buy your house for $390k because you have an unfinished basement. The second offer says they’ll buy your home for your asking price of $400k; this one seems great. Upon looking at the 3rd offer, you see that this buyer offered $420k. The buyer probably knew they were competing with other offers, so they offered more than your asking price. You’re in control of the purchase and choose the 3rd offer, making you an extra $20k to sell your house. Seller markets are great when you are selling because you have the power to choose the best offer. It’s important to understand the housing market so you can know how to approach things, whether you’re a buyer or seller.
A buyers market is when numerous houses are for sale, but very few people are looking to buy. Buyers are at an advantage when negotiating the purchase of a home. Sellers are disadvantaged because they want to sell their homes but receive no offers. Let’s give a quick example of a buyer’s market. Let’s say Jeff is selling his home for $400k and hoping to move in 3 months. 2 months go by without any offers, and Jeff begins to panic because he really needs his house to sell so he can move. To his relief, he gets an offer for his home from you, the buyer. Jeff reviews the offer and discovers you sent in an offer of $370k to purchase his home. Jeff hasn’t had any offers for two months, and you know there is no competition to purchase Jeff’s home. Jeff accepts the offer because he has no other offers and has to move soon. You saved $30k because you had the advantage of being in a buyer’s market.
Why you Should Buy instead of Rent
Rent has increased exponentially in the past few years, making it more unpredictable and harder to keep up. Rent is growing much faster than most median incomes, meaning rent is rising, but people are still making the same amount of money, making it harder for people to compensate for their increased rent expenses. Buying a home is a better long-term investment. When you buy a home, you are essentially paying yourself and not wasting your money on paying a landlord. When you buy a 30-year mortgage, you’re investing in yourself with your monthly mortgage payment until you eventually sell your property. Selling essentially gets your mortgage payments back. When buying a home, there’s no need to worry about mortgage payments increasing every year, and you’ll even have opportunities to refinance your home and decrease the amount you pay in your mortgage after some time. Also, first-time buyers have the right to purchase a house with zero down payment; this removes the burden of saving up for a downpayment.
Is Now the Time to Buy?
With all of the elements you have to consider in the housing market it can be hard to know if now is the right time to buy a home. Now is the time to buy because:
Mortgage Rates are Predicted to Drop
Fixed-rate loans have been increasing quickly over the past three years, but when there is such a quick escalation in rates, they tend to fall soon after. Soon we’re expecting to experience the hush after the storm, where the rates will drop again. Start looking for homes to buy now and ensure you’re getting those hush rates before the storm increases and rates get higher.
Fewer Offers per Home
2021 was a housing crisis in Utah, and everyone was looking for new homes. There was a large increase of people from out of state, like California moving here. Those people were selling their homes for around 1 million dollars, moving here, and buying up all of our properties. It was a seller’s market galore. Sellers here were getting multiple offers the same day they put their houses up for sale with offers ranging well above the asking price; it seemed almost impossible to compete with. Today’s market is slowing back down in 2022, and we’re seeing the market change from a seller’s market back to a buyer’s market. Sellers are putting their houses on the market for more than market value, and no buyers are willing to pay overprice. These houses will be on the market with no offers for months, leading them to reduce the price of their homes. Now is the perfect time to buy, competition is low, and house prices are dropping.
New Credit Systems
Fall is the time to buy a house in 2022 because credit companies have stopped adding unpaid medical collections and medical debt to credit card scores. Credit scores are increasing. The government stated that people previously hindered by this medical debt should see an increase to their credit score near 22 points. Increased credit scores lead to lower mortgage rates and down payments, increasing the ability to afford a home.
Now is the perfect time to find and buy a home. With mortgage rates predicted to drop, new credit systems out, and fewer offers per house putting the housing market back in control of the buyer. Connect with us today, and we’ll help you find the best home that checks all your boxes.