Should you buy a home now or should you wait? That’s a big question on many people’s minds today. And while what timing is right for you will depend on a lot of other personal factors, here’s something you may not have considered.
If you’re able to buy at today’s rates and prices, it may be better to focus on time in the market, rather than timing the market.
The Downside of Trying To Time the Market
Trying to time the market isn’t a good strategy because things can change. Here’s an example: For the better part of this year, projections have said mortgage rates will come down. And while experts agree that’s still what’s ahead, shifts in various market and economic factors have pushed back the timing of when that’ll happen. Here’s how that’s impacted homebuyers who’ve been sitting on the sidelines. As US News reporter Erika Giovanetti said:
“But even in 2022 and 2023, when mortgage rates began their relentless climb, home prices didn’t drop. Instead, they rose by about 10% between January 2022 and January 2024.”
All the people who were waiting for mortgage rates to decrease ended up missing out on lower home prices. This is why timing the market may not pay off if you’re ready and able to buy now.
How Homeowners Benefit from Rising Home Prices
Delaying your plans also means missing out on the equity you would gain if you went ahead with your purchase today.
Each quarter, Fannie Mae releases the Home Price Expectations Survey. It asks over one hundred economists, real estate experts, and investment and market strategists what they forecast for home prices over the next five years. In the latest release, experts are projecting home prices will continue to rise through at least 2028:
To give these numbers context, let’s take a look at a breakdown of what you stand to gain once you buy. The graph below uses a typical home’s value to show how a home could appreciate over the next few years using those HPES projections:
In this example, let’s say you went ahead and bought a $400,000 home at the beginning of this year. Based on the expert forecasts from the HPES, you could gain more than $83,000 in household wealth over the next five years.
This data helps paint the picture of why time in the market matters more than trying to get lucky and perfectly time the market.
The Advice You Need To Hear If You’re Ready and Able To Buy Now
Right now, you may be focused on what’s happening with mortgage rates and how those impact your monthly payment, but don’t forget to factor in home prices.
Prices are expected to continue climbing, just at a more moderate pace. And while a moderate rise in prices may not be fun for you now, once you own a home, that growth will be a huge perk. That’s the benefit of more time in the market. You could try timing the market, but the equity you’ll be missing out on in the meantime is something to seriously consider. If you’re ready and able to buy now, you have to decide if is it worth waiting and potentially missing out.
With so much uncertainty, it’s important to focus on what you can control.
What You Can Control
Your credit score
Credit scores play a big role in your mortgage rates. Lenders consider your credit score before approving you for a loan and the accepted interest rate. That’s why it’s even more important to maintain a good credit score. With rates where they are, you want to do all you can to get the best rate possible.
Your loan type
There are many different types of loans, so make sure you find out what’s available for your situation and what types of loans you may qualify for.
Your loan term
Another factor to consider is the term of your loan. Just like with your loan types, you have options depending on your situation.
Bottom Line
If you’re debating whether to buy now or wait, remember it’s all about time in the market, not timing the market. If you are read and able to buy a home, reach out to a Seven Gables agent today to discuss your options.
