10 Pros and Cons of Buying a House Right Now

Buying a house is a monumental decision that can impact your financial future for years to come. It doesn't help that today's declining housing market is adding a layer of complexity to the decision-making process. Demand is down, rates are up, and prices are starting to fall.

While there are several drawbacks to buying a home in a declining housing market, there are also some benefits to buying now. These 10 pros and cons of buying a house right now will give you some factors to consider as you weigh your decision.

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There's been a lot of talk of a housing recession. Home sales are down for the 6th consecutive month. A growing number of sellers are reducing their prices as homebuying demand weakens. There are clear signs that the market is headed for a correction, and we're just at the start of the changing conditions. Meaning prices will likely continue to fall in the near future.

Two years of low interest rates and short housing supply drove year-over-year home price growth into the double digits. June 2022 was the highest median home price recorded in U.S. history. On top of high home prices, higher interest rates make it an extremely expensive time to buy a home.

On top of a housing recession, there's been a lot of talk lately about a potential economic recession. Recessions are usually marked by changing employment opportunities. As spending tightens, some companies cut jobs to preserve capital, leading to higher unemployment.

If you secure a mortgage at one of the most expensive times to buy a home and lose your job or get a pay cut, it could leave you with a mortgage you are unable to pay.

ALSO READ: Is a Major Recession Coming? 66% of Americans Think So

Buying a home today means paying at or near peak pricing. Considering home prices are starting to fall, declining home values could cause you to be underwater, where you owe more than the home is worth.

Fitch Ratings is predicting a 10% to 15% decline in prices. Considering most buyers put 10% to 20% down to buy a home, the point of being underwater could be reached quickly. Being underwater isn't a huge problem unless you want to sell.

Hopefully, you plan to buy a home and stay for a while, but if you want or need to sell in the next few years, it could be a challenging market. If prices fall and your home is underwater, you may be forced to sell your home in a short sale, where the bank agrees to accept a payoff less than what's owed. A short sale isn't great for your credit and is a timely process that leaves you with little to no money left for your next housing.

Even if your home retains its value and you have equity when it's time to sell, selling in a down market isn't easy. More housing supply and lower demand mean it can take longer to sell, and you'll likely get much lower pricing.

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Buying a home today still beats out renting. Rents have grown almost as quickly as home prices. And in many markets, buying a home is more affordable than renting.

Not to mention that renting builds the landlord's equity, leaving you with nothing at the end of the lease. Buying today secures your interest in a home, building equity over the long haul with each payment you make.

Long-term trends favor positive home price growth when held for 20 to 30 years. Like the stock market, the values decline in some years and rise quickly in others. Taking a long-term approach to buying means you're likely securing a home for far less than it will be worth 20 to 30 years from now.

Interest rates will likely continue climbing as the Federal Reserve tries to tame inflation. That means today's lower interest rates are likely less than if you were to buy a year or two from now. Plus, you always have the benefit of being able to refinance if rates drop in the future.

ALSO READ: Buyers Beware Mortgage Rates Likely to Hit 8% - 10% by 2025.

Inflation is at a decade's high, eating away at the dollar's buying power. Securing a fixed-rate mortgage, even at a higher interest rate, means locking in your payment at today's value.

A $1,500 mortgage 5 to 10 years from now may not seem like much. And it will almost certainly be a more affordable payment than renting, which will continue adjusting for inflation.

Buying a home today also unlocks certain tax advantages, like writing off the interest paid on your mortgage. Rising rates mean you're paying more in interest over time. But thankfully, you can deduct that from your tax basis.

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There are certainly reasons to wait to buy a home right now, particularly regarding pricing. But there are many factors that definitely make buying now more sensible if you are financially ready and searching for new housing. If you are looking for short-term housing, meaning you could sell in the next five years, renting until the market has corrected itself could be in your favor.

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