Mortgage rates are up and some markets have cooled down, but the reality is that the decision is very personal.
The right time to buy a house can be relative. My wife and I decided it was time to get back into owning our principle residence because the rental market had become too expensive to make sense.
We had sold our West Palm Beach, Fla., home during the pandemic because we needed more space with both of us working at home. At the time, we used the profits to buy a resort property in the Orlando area near Disney World and we rented a large four-bedroom townhome.
The space was about double what we had in the condo we had sold, but we traded a building that was close to downtown for one where going anywhere except Target requires getting in the car. It was a sacrifice, but we needed to stay on our son’s school bus route as he was a junior going to an out-of-town school on a special program and moving outside that route would have meant us having to drive him.
In year one of our rental, we paid $2,495 per month and that went up to $2,700 in year two. We had planned, once he graduated, to rent a slightly smaller place in Delray Beach, Fla., right in the heart of the city’s vibrant downtown for a year to decide if we might want to buy something in that area.
Rising rental prices made that impossible. We would have had to pay between $3,200 and $3,500 per month to get even close to what we wanted making renting more expensive than spending $400,000 to buy a new home.
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Buying a Home May Take Sacrifices
In our case, since we planned to buy eventually, rising mortgage rates and a very tough market for buyers were not our deciding factor. Ultimately, we went with the logic that spending over $3,000 per month to rent a home, made little sense when we (thought) we could find something we would be happy in for $350,000 or less.
That turned out to be not true if we wanted to stay in South Florida. Prices have gone up significantly in West Palm Beach and we thought we would be able to find what we wanted in some nearby cities and towns that generally have lower prices.
Technically there were properties we could afford, but most had major flaws. Some were the nicest condo in a crummy development while others needed more work than we could afford to do at the price we would likely pay for the home.
Ultimately, we decided that since we wanted a house in a nice community with a pool, a gym, and walking trails, we decided to open up our search. We eventually found a single-family home about 40 minutes north of where we would have chosen to live that we were able to buy for well within our budget (even when you factor in the need for a total renovation).
Buying a Home Is Personal
Mortgage rates may keep rising or they may go back down. Some areas may see prices crash while others may see them keep inching higher. Markets can vary — there’s no one singular U.S. housing market — and where you pick to live matters.
The reality is that buying a house has little to do with the market or mortgage rates. It’s about your needs right now and doing a risk/reward assessment. We believed that renting for a year in an area we probably could not afford to buy in made little sense.
In addition, while mortgage rates were not a factor (we got in at 3.75% just before they started to climb toward 5%), the market was. We looked at all the people flocking to Florida and how that has forced people who already live here to move to new towns. Our new town, seemed like a market that may cool off, but it was unlikely that waiting a year would bring us a better price (that has so far proven true as homes similar to ours are selling for $40,000-$50,000 more than we paid just four months ago).
Should I buy a home is a question you should answer based on your needs and not economic forecasts. Do your homework, but remember that if you’re going to live there for an extended period of time, the math right now may not matter all that much.
Buying a home is an investment, but it’s also where you will live. Use your head (and get help from a Realtor) but also use your heart. Don’t let your heart trick you into spending too much (that’s where the head comes in) but make a decision that fits your reality not what experts say about the housing market.