by Maurie Backman | Aug. 11, 2020
Many or all of the products here are from our partners. We may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.
Despite low mortgage rates, the public isn't super keen on buying homes right now.
Read the news, and you'll keep hearing that mortgage rates are unbeatable right about now. And that means that if you lock in a mortgage, you stand to reap serious savings over time.
But despite the fact that mortgage rates have reached a low, now may not be an ideal time to buy a home. In fact, only 53% of consumers say now's a good time to move forward with a home purchase, according to Fannie Mae's July Home Purchase Sentiment Index. That's an 11% decrease from the previous year and a 19% decrease from the previous month.
The question is: Should you be looking to buy right now? Or are you better off waiting?
Get free access to the select products we use to help us conquer our money goals. These fully-vetted picks could be the solution to help increase your credit score, to invest more profitably, to build an emergency fund, and much more.
By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.
Just because some people think now's a bad time to purchase a home doesn't mean it's a bad time for you. If your credit score is high, you don't have a lot of debt, your job is steady, and your income is solid, then it means you're in good shape to snag a competitive rate on a mortgage. And that means you'd get to capitalize on today's historically low rates.
It also pays to buy a home if you actually find one you like in your price range, and in a neighborhood you want to live in. There's currently limited inventory on the housing market, and so a lot of sellers are raising prices because, well, they can. But it's still possible to find an affordable home, so don't discount that possibility before you look.
On the other hand, now may not be the ideal time for you to move forward with a home purchase. If you're not an optimal borrowing candidate, then you may not qualify for the ultra-low mortgage rates you're seeing. For example, perhaps your credit score needs improving, you have a lot of debt already, or your job is on the line because you work in an industry that's been hard-hit by the pandemic.
Furthermore, as mentioned above, house prices are higher than normal. If you're having a hard time finding an affordable home, or a home that's in decent shape, then it could pay to wait until the housing market opens up -- there could be an influx of listings further down the line. There's no sense in stretching your budget and overpaying for a home if you might have more properties to choose from in six months to a year.
Right now, it's a seller's market, which means that if you list your home, you could command top dollar for it. But interestingly enough, only 45% of people think now's a good time to sell, and 48% think it's a bad time.
If you have concerns relating to the ongoing COVID-19 pandemic (meaning, you don't want strangers wandering into your house touching things), then that alone is a good reason to hold off on selling. But if you check your local market and see that very few homes are listed, it means you have a prime opportunity to snag a great price for your property, especially with mortgage rates being so low and some buyers clamoring to take advantage of them.
A good 35% of people think home prices will continue to climb in the next year. If you feel similarly, then you may want to try to purchase property now.
On the other hand, 23% think home prices will go down in the course of the next 12 months. If you're in that camp, then it could pay to wait. By sitting tight, you'll take the risk that you'll miss out on today's outstanding mortgage rates. On the other hand, mortgage lenders have offered relatively low rates since the start of the year. They may rise in the coming 12 months, but there's a good chance they'll remain competitive, historically speaking. As such, it could pay to delay your home purchase, especially if you're unhappy with the homes you have to choose from.
Ultimately, it almost doesn't matter whether the public thinks now is a good time to buy or sell a home. In making your decision, you should rely on how you feel as it's your money and living situation on the line. It helps to get a sense of what consumers are thinking, but at the end of the day, you're in the best position to evaluate whether now's a good time to buy a home, sell a home, or hold off on making any moves relating to owning property.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
The Ascent's in-house mortgages expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!). Click here to learn more and see your rate. While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See The Ascent's full advertiser disclosure here.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.