To Buy Or Not To Buy… That is the question!
As I type this (July 2022), we are feeling the effects of rising inflation. From the cost of milk and bread, to lumber and electrical, it costs more to buy staples. With the annual inflation rate at 7.5% at the time of writing, the highest in 40 years, you might be wondering if now is the best time to buy a new home.
Experience has taught me that home ownership is directly linked to jobs and affordability, so lets take a look at home buying at this changing time. Historically, real estate values have outpaced inflation, making it a great way to protect your money. And while you may not become a millionaire with your investment, real estate can certainly help you improve your financial position.
Real estate is a long-term investment, so if you’re looking for a short-term gain, buying right now is probably not the best idea in your case.
For the long term, though, real estate has been, and continues to be, a great investment over time.
What are some other concerns that might be holding you back from purchasing a home right now?
Are you waiting for prices to come down?
All economic projections are indicating that home prices are going to continue to rise, as are interest rates. The longer you wait, the less purchasing power you will have. Dr. Lawrence Yun, chief economist for the National Association of REALTORS®, and a panel of economists at NAR, forecast that median home prices will increase by 5.7% in 2022, while other experts expect to see a rise of 6.6%. Again, if you’re looking for a long-term investment, you’re not too late to capitalize on this trend…especially before interest rates rise further.
Do you want more listings to hit the market, giving you a better chance of finding what you want?
We would LOVE to have more listings, but inventory will continue to remain low, at least for the first half of the year. Rather than waiting, you may want to entertain the idea of building. After all, the gap between existing home prices and new construction has closed dramatically, making building a much more attractive value proposition.
Are you afraid of multiple offers?
The competition has been still fierce on hot properties. Many REALTORS® are used to handling multiple offers, so know that you are not going thru this alone! This is a time for strategy, of coming in prepared with a well-written offer, complete with all signed disclosures and proof of your good faith. I am recommending to all my buyer clients….
- Get a preapproval letter: By being proactive and going to your lender first to see what your budget will allow, that letter will carry a lot of weight, making your offer stand out against others.
- Conventional Financing or better yet, Pay in cash if you can: A cash offer means no mortgage approval is needed and the transaction process can happen at a quicker pace.
- Limit or Lose the contingencies: In this market, time is of the essence, and sellers aren’t necessarily able to wait until a prospective buyer sells their home. Lending institutions have risen up to meet the need for bridge, or swing loans. An offer without contingencies will win out every time.
But, if you’re not willing to compete, it might not be the best time for you to buy. However, if you BUILD a home, the competitive offer situation becomes a non-issue. Buyers will still have to wait a little while for competitive home shopping to cool down, but we should see relief in 4th quarter 2022 and into 2023.
Are you afraid of the current market news?
Too often, a prospective homebuyer delays getting into the market because they think the timing could be wrong. In reality, there are a number of factors to consider, not just whether you’ve heard it’s a seller’s market.
Interest rates are some of the lowest in years, making this a great time to buy. But regardless, if you stay within your means and pay attention to your finances post-sale, it’s going to be a great time to buy because you will begin reaping all the benefits of homeownership.
Are you concerned about financing?
So many clients believe you have to have 20% of the purchase price saved as a down payment. Coming up with 20% down is the biggest hurdle for a lot of buyers. But the reality is, you don’t actually need to put 20 percent down to buy a house. There are plenty of loan options available that allow you to put as little as 3.5% to 5% down. 95% Conventional Loans, FHA, VA Veterans Administration, Rural Housing, KHC Kentucky Housing Corporation… Ask your Tony Clark Realtor for guidance on a lender that has the best loan products for fit your needs!
Are you concerned about credit score? or worse, rejection?
Your credit score isn’t good enough. Having great credit is certainly helpful when you’re trying to get a mortgage loan. For one thing, you’ll be able to get the best terms for your loan. But, even if your credit is less than perfect, you don’t have to give up on buying a home. For example, you may be able to finance your home with an FHA loan, which has lower credit and income qualifications than a conventional loan. This is another item to discuss with your lender. Many mortgage lenders can recommend credit repair programs to help buyers boost their credit score so they can buy a home in the not-so-distant future… We are here to help you!
The real estate experts at Tony Clark Realtors are ready to talk to you about any questions you have about real estate. #CallClark (270) 926-0055
Tony Clark Realtors®, LLC is located in Owensboro, KY, and has been representing home buyers and home sellers for over 40 years. Tony Clark Realtors® is also trusted by many property owners to manage their rental properties, having one of the largest portfolios of rental properties available in the area. When you choose Tony Clark Realtors® for your real estate needs, you can have peace of mind as to the high value and quality of service you'll receive.