Is Now a Good Time to Buy a Home? Should owners sell? Your guide to the hot real estate market

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With any purchase, people want to know if they are getting a good deal. But when it comes to buying a home in today’s market, this question is difficult to answer.

Americans are laser-focused on the state of the housing market as the country enters peak spring home buying season. Google GOOGL search trend data,
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shows that people are wondering whether now is the time to buy or sell a home.

Some of these people may be trying to make up for lost time. Around the same time last year, real estate transactions slowed significantly as COVID-19 restrictions on businesses prevented home sales from continuing in many states. But home buying has made a comeback, as the typical spring deluge of home sales has spread through summer – and fall and winter.

In truth, since that initial slowdown at the start of the pandemic, activity has not slowed down much in the real estate market. The pandemic has quickened the clock for many families, who find themselves flocking to see homes in more suburban areas in order to get more space for their growing households. In addition, many people are looking to take advantage of their newfound ability to work remotely and move away from the country’s dense urban cores to more rural areas where they could save money now that they no longer have. to worry about long journeys.

What does all of this mean for people looking to buy or sell a home right now? Here’s what real estate and financial experts say:

Yes, it’s a seller’s market – but it’s more complicated than you might think

Home prices have skyrocketed throughout the pandemic, and they are not expected to drop anytime soon. In January 2021, home prices rose 11.2%, according to the S&P CoreLogic Case-Shiller National Home Price Index. Growth in house prices is occurring at the fastest pace since the Great Recession.

Why are house prices rising so fast? The demand for housing is high, but there is not much for sale at the moment. Years of under construction have left the country facing a severe housing shortage. Increasing demand and decreasing supply is a perfect recipe for higher prices.

This is good news for those who can sell their homes now. But there’s just one problem for most salespeople: They always need a place to live. “You’re going to be among all the other buyers competing for the small number of homes,” said Elizabeth Renter, data analyst at NerdWallet.

Throughout the pandemic, people who already own a home have been hesitant to put their properties up for sale. To some extent, this reflects the health risks associated with COVID-19 – and certainly many people were concerned about exposing their families to the virus by screening.


“You’re going to be among all the other buyers competing for the small number of homes. ”


– Elizabeth Renter, Data Analyst at NerdWallet

But the shortage of homes for sale has become a vicious cycle, preventing sellers from listing their homes and thus keeping inventory low.

Anyone who needs to sell must remember that the ball is in their court. Due to the strong competition in the market at the moment, buyers are willing to make a lot of concessions to make their offer more attractive. Savvy sellers can take advantage of this by asking to move the closing date to coincide with the purchase of their next home, the tenant said.

“If it weren’t for such a strong seller’s market, buyers might not find it attractive,” she said. “However, buyers know that sellers have a list of lined up buyers – so if that doesn’t go through, the seller is likely to find someone else to buy their home.”

MarketWatch is here to help you navigate the housing market, with indefinite Have a question about buying or selling a home? Do you want to know where your next move should be? Email Jacob Passy at TheBigMove@marketwatch.com.

Sellers shouldn’t be overconfident about the timing of the market

The higher prices certainly attract some sellers to the market. A recent survey from NerdWallet and The Harris Poll found that about 1 in 6 homeowners plan to sell their home in the next 18 months. Of those people, 45% said rising home prices and falling inventories made them consider selling sooner than expected.

But owners need to be cautious when trying to gamble in the market, financial experts have warned. “Calculating the housing market is almost as difficult as timing the stock market,” said Rick Brooks, co-owner of Blankinship & Foster, a wealth consulting firm in Solana Beach, Calif.

“And the transaction costs are much higher,” Brooks said.

Some owners began to question whether it is worth listing their homes now to lock in a high price, then renting them out until they can find their next home. But it is a risky move. As Brooks argues, it is “almost impossible” to adequately compare the costs of renting a home with the cost of owning one, because the two markets “don’t always work in tandem.”

Buyers should arrive prepared – in more ways than one

As the wisdom in real estate says, the best time to buy a home is when you need it because your life has changed. Many people choose to own property after marriage or when they have children in order to better control their housing costs while building wealth.

That is, a lot of people don’t have the luxury of waiting to buy. And again, the timing of the market can be a wild ride.

At the same time, it’s easy to get carried away by the excitement of trying to secure your dream home in the midst of a bidding war.


“Be really tough on your home budget. ”


– Danielle Hale, Chief Economist at Realtor.com

For starters, buyers should take a look at how trends in their local market compare to what’s happening nationally, said Danielle Hale, chief economist at Realtor.com. Find recently sold homes in your neck of the woods and learn more about them. How long have they been on the market? How much more than asking for the sale? Did the buyers have to do any major renovations afterwards? These details will give buyers a sense of how competitive their local market is.

Then they have to take on the difficult task of establishing a strict budget. “Be very firm on your home budget,” Hale said. “I know this is probably a challenge for many buyers in an environment where home prices are rising very quickly.”

Figure out how much you can afford to spend each month on your mortgage, insurance, and home maintenance. Use it to figure out how much you can afford. And then – here’s the hard part – avoid looking for homes at the top of that budget. Homes in many markets have far higher offers than demanded, and if a buyer lets emotion keep them from exposing themselves to financial trouble.

Make the biggest down payment possible

Many Americans seem to be concerned about the possibility of a real estate crash. Google searches for phrases like “When is the housing market going to collapse?” Have increased by over 2,000% over the past month. “If we see prices going up as quickly as we did, for some people it might spark memories of the last time around,” Matthew Speakman, economist at Zillow Z,
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MarketWatch said.

Real estate experts agree that while the market may cool down somewhat – especially if mortgage rates rise – the chances of the market experiencing a downturn like it did during the Great Recession are slim.

That said, buyers can protect themselves and their investment in today’s market. The key is to make a larger down payment. “While low interest rates make future homeowners buy as many homes as they can afford, and put a very small amount, I strongly recommend that clients put at least 10% on their home,” said Liz Gillette, financial advisor at Main Street Planning.


It takes an average of 11 years to make a 5% down payment, new report finds

In the first few years of homeownership, buyers accumulate little equity because more of their mortgage payment goes to pay off interest rather than the loan principal. So suppose a homebuyer gives a 3% cut on a house with a 3.2% interest rate, but has to sell – because, as Gillette warns, “Life has a way. to throw curve balls at us “. At this point, you would have accumulated around 9% of equity, but you could spend up to 7% to sell the house.

“You have very little left to fund your next home down payment,” said Gillette. And that doesn’t even take into account the prospect of declining property value. A larger down payment provides a buffer against these possibilities.

Of course, saving a bigger down payment isn’t easy. A new report of the Center for Responsible Lending found that it takes a typical worker 11 years to save up to 5% down payment on a median price home. It’s even more difficult for black households, who can expect to spend an average of 14 years making such a large down payment.

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