More People Now Think It's a Bad Time to Buy a Home
Despite low mortgage rates, buyers are less keen on purchasing homes these days.
Mortgage rates have been at historic lows since the summer, so you'd think it would be a great time to buy a place of your own. But the public doesn't necessarily agree.
In fact, the percentage of people who feel it's a good time to buy a home decreased from 57% to 52% in December, according to the The Fannie Mae Home Purchase Sentiment Index. At the same time, the percentage of people who say it's a bad time to buy a home increased from 35% to 39%.
Why the negativity?
Inflated home prices could be to blame for homebuyers' less optimistic sentiments. In November, the median price of homes sold was $310,800, a 14.6% increase from a year prior. Furthermore, housing inventory is sitting at just a 2.3-month supply, giving sellers an extreme upper hand. Usually, twice that inventory makes for an equalized housing market in which neither sellers or buyers have a notable advantage.
Is it a good time for you to buy a home?
Though fewer people think now's a good time to buy a home, that's ultimately a personal decision, especially since mortgage rates are extremely attractive. To help determine whether you should buy in the near term, ask yourself these questions.
Am I financially stable?
Going into homeownership, you should have a steady job, a healthy down payment ready, and money left over in an emergency fund to cover unplanned bills. If you're not there yet, it pays to wait.
Do I have a great credit score?
To snag a competitive mortgage rate, you need solid credit. Though you can qualify for a mortgage with a score as low as 620, to get the best rates, your score needs to be in the mid-700s or possibly higher, depending on which lender you use. If your credit score needs work, you may want to put off a home purchase.
Do I have a lot of debt already?
Having too much debt could make a mortgage hard to keep up with. But more than that, it could mean a lender denies you a loan. See what your outstanding monthly obligations look like and aim to lower them if they're already high. Paying off a personal loan or credit card balance, for example, could bring your debt to a healthier level.
How tight is my local housing market?
Though housing inventory on a national level was at a 2.3-month supply as of November, things may look different in the neighborhood you want to buy in. Maybe there are more homes available where you're looking, or there are fewer. See what your local market looks like, and if things are extra tight, you might consider holding off until at least spring, when inventory has historically picked up.
Though more people feel now's not a great time to buy a home, you may see things differently -- and that's what is most important. Think about your financial circumstances as well as the state of your target housing market, and use that information to guide your decision.
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