Should I Buy A House Now Or Wait Until 2024

Should I Buy A House Now Or Wait Until 2024

As we head into the last months of 2023 the real estate market finds itself in a bit of a conundrum, rising interest rates have forced some buyers to scrap purchasing a home all together, if you can't afford the house when mortgage rates are high what do you do? So with less buyers home prices have started to look better right? Not at all, in fact in our market, the Greater Raleigh/Triangle area the average sales price in September 2023 was up 2.6%. This is a result of a lack of inventory and homeowners who bought or refinanced in the last few years are going to stay in the home. It may seem like a bad time especially for first-time home buyers so do you wait until next year or try and start building equity now.

Couple dreaming of a house

So what are the options available if you think deciding whether to buy now is the right thing to do. Lower your budget, it sounds tough but it's better for your financial health, there will be fluctuations in home prices but home values traditionally over the long term do rise. Expand your search area, you will get a better deal on a home if you look further out from the more popular, desirable neighborhoods, cities and towns you will have less competition.  Have you saved enough for a down payment, if not or you need help, start looking at what new home builders are offering. These days new construction is where you could get a deal on an existing home where buying now means you start building equity immediately. Work with a local real estate agent who knows what builders are reputable and where they have inventory of homes for sale. There are lots of questions people are struggling to answer in today's homebuying climate, what will the federal reserve's next move be, which has some who might be wondering if owning a home is in their foreseeable future.

Current Housing Market Conditions... A Good Time To Buy?

Interest Rates: Historically low interest rates have been a driving factor for many buyers in recent years. If rates are expected to rise in 2024, buying now could mean securing a lower mortgage rate, which can save you thousands over the life of your loan.

Inventory Levels: In many regions, including the Triangle area of North Carolina, inventory levels have decreased. A tighter market can mean higher prices and more competition among buyers. If inventory is expected to increase in the new year, waiting might offer more choices and negotiating power.

Economic Forecasts You Should Consider Before You Buy A House Now Or Wait 

Cartoon forecast

When contemplating the decision to buy a home and make an informed decision, it's important to look beyond the current state of the housing market and consider broader economic trends. These can influence mortgage rates, employment opportunities, and overall affordability. Here are some key economic indicators and forecasts to keep in mind:

1. Interest Rate Predictions: The central bank's stance on interest rates can significantly impact mortgage rates. If forecasts indicate a rise in interest rates in the near future, it might be more cost-effective to lock in a mortgage now. Some banks are offering programs that allow you to refinance within a certain period without incurring any fees.  Conversely, if rates are expected to drop, waiting might be beneficial. At some point it is presumed that rates drop but they could rise even higher before that.

2. Job Market and Wage Growth: A strong job market can boost consumer confidence and increase buying power. If economic forecasts predict robust job growth and rising wages in your region, it might indicate a more competitive housing market in the future. On the other hand, if there are signs of an economic slowdown or potential layoffs in dominant industries, it might be wise to wait and ensure job stability before committing to a mortgage.

3. Inflation Trends: Inflation erodes purchasing power. If the economy is expected to experience high inflation, the real cost of a mortgage can increase, even if nominal rates remain unchanged. Monitoring inflation forecasts can help you gauge the long-term affordability of a home loan. The federal reserve's work to tame inflation has had a direct impact on 30-year mortgage interest rates. 

GDP

4. GDP Growth: Gross Domestic Product (GDP) growth is a broad indicator of an economy's health. Strong GDP growth often correlates with a robust housing market, as consumers are more willing to make significant purchases in a thriving economy. If forecasts predict a downturn, however, housing prices might stagnate or drop.

5. Consumer Confidence Index: This index measures how optimistic consumers are about the state of the economy, which in turn influences their spending and saving habits. A rising Consumer Confidence Index might indicate that people feel positive about their ability to secure and repay a mortgage, suggesting a more competitive housing market ahead.

6. Government Policies and Regulations: Upcoming elections, potential changes in housing policies, or shifts in tax regulations can influence the housing market. For instance, if there's talk of introducing first-time homebuyer incentives or changing property tax structures, these can impact the cost and appeal of buying a home. 

7. Global Economic Factors: In today's interconnected world, global events can have ripple effects on local economies. Trade wars, global recessions, or significant shifts in major economies like the US, China, or the EU can indirectly influence housing demand and mortgage rates in other countries.

Your Personal Financial Situation Decides The Time To Buy A Home

While market conditions and economic forecasts are essential factors in determining the best time to purchase a home, your personal financial situation is arguably the most crucial determinant. Here's why:

1. Down Payment: The amount you've saved for a down payment can significantly influence your home buying decision. A larger down payment can reduce your monthly mortgage payments, potentially allowing you to afford a home in a more desirable location or with more amenities. If you're close to reaching a savings milestone that would allow for a more substantial down payment, it might be worth waiting a bit longer before purchasing.

2. Debt-to-Income Ratio: Lenders look at your debt-to-income ratio to assess your ability to manage monthly payments and repay loans. If you have significant debts, such as student loans or credit card balances, it might impact the mortgage amount you qualify for. Prioritizing debt reduction before buying can put you in a stronger financial position.

Credit Score

3. Credit Score: Your credit score plays a pivotal role in determining the interest rate you'll receive on your mortgage. A higher score can save you thousands of dollars over the life of your loan. If your score is currently on the cusp of moving to a higher bracket, it might be beneficial to focus on credit-building strategies before buying.

4. Emergency Funds: Homeownership comes with unexpected expenses, from repairs to property tax increases. Having a robust emergency fund ensures you can handle these unforeseen costs without jeopardizing your mortgage payments. If your savings aren't sufficient to cover potential emergencies, consider building this fund before purchasing.

5. Future Income Stability: Your current income might allow for a home purchase, but it's essential to consider future stability. Are you in a stable industry, or are there potential layoffs on the horizon? Are you considering a career change or going back to school? These factors can impact your long-term ability to meet mortgage obligations.

6. Long-Term Financial Goals: Becoming a homeowner  is a significant commitment that can impact other financial goals, such as retirement savings, travel aspirations, or starting a business. It's essential to consider how homeownership fits into your broader financial picture and whether it aligns with or detracts from other priorities.

7. Market Equity vs. Personal Equity: While market equity (the value of the home in the market) is essential, personal equity (your financial investment in the home) is equally crucial. If you're not in a position to invest sufficiently in your home, you might find yourself in a challenging situation if market conditions change.

Future Housing Predictions Says Wait Until 2024 ...Unless!

Price Trends: If housing prices are expected to decline in the new year, waiting could be beneficial. Conversely, if home prices are predicted to rise, buying now might be the smarter choice.

New Construction: If there's a surge in new construction anticipated for 2024, waiting could provide more options, potentially at more competitive prices.

Will Your Lifestyle Choices Differ in 2024 Compared To 2023

As we progress through life, our priorities and desires often shift. When contemplating a significant commitment like the when to buy a property it's essential as a home buyer  to project how your lifestyle might evolve in the coming year. Do you plan to stay in the area you currently live for at least five years, if not then this may not be the right time to buy.

Fish jumping out of bowl

For instance, your current job situation in 2023 might be on the verge of change by the following year. Perhaps you're contemplating a career move, expecting a promotion that might require relocation, or even considering starting your own business. Additionally, personal and family dynamics can also transform. 

You might be planning to expand your family, which would necessitate more space, or perhaps you're looking to downsize as children head off to college. Furthermore, personal interests and hobbies can influence where and how you want to live. If you're thinking of taking up activities that require proximity to certain amenities, like beaches, mountains, or urban centers, this could impact your ideal home location. In essence, while the present moment offers clarity, it's crucial to forecast how potential shifts in your lifestyle next year might influence your housing needs and desires.

Conclusion

The decision to buy a house in 2023 or wait till 2024 is multifaceted, depending on market conditions, economic forecasts, personal finances, and lifestyle factors. While it's essential to consider all these elements, remember that a home is not just an investment—it's a place to live, grow, and create memories. Whether you choose to buy now or wait, ensure it aligns with both your financial goals and personal needs.

This post is brought to you by David O'Doherty, a licensed real estate agent since 2007 helping buyers and sellers in the Greater Raleigh Area of North Carolina. He is committed to providing his clients with exceptional service and personalized attention throughout every step of the real estate process. If you're looking to buy or sell a property in the Greater Raleigh Area or have any questions about the local real estate market, don't hesitate to contact David O'Doherty today. Call or Text (919) 601-2268 or email [email protected]

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