Why Our Real Estate Agent Said 2021 Is Not the Time to Buy a Home

It's such a bad time to purchase a home that our real estate agent told us to give up for now and wait.

During the pandemic, my husband and I have flip-flopped on buying a second home. We have the funds for a down payment saved up for one, and our credit scores are such that we'd qualify for a mortgage pretty easily.

Back in May, we made the decision to put our home-buying plans on hold. But we recently reconsidered.

See, right now, mortgage rates are extremely competitive, so from that perspective, it's a great time to buy. In fact, just the other week, we decided to meet with a real estate agent who specializes in homes in the area we're looking to buy in to get his thoughts. And in a nutshell, he basically told us not to even think about buying a home this year.

Back to holding off

As much as my husband and I would like to purchase that second home while mortgage rates are low, our agent convinced us that now's a bad time with some pretty compelling facts. First, right now, there are about three homes for sale in the area we're looking at that are within our price range. Three.

Now we don't have the most generous budget since this is, after all, a second home. But still, in a normal market, there would easily be a lot more listings to choose from. Right now, inventory is actually extremely limited on a national level, and that extends to the small town we have our eyes on.

But here's the other issue. Not only are listings in short supply, but home values are sky-high where we're looking. And, as our agent put it, we won't get good value for our money if we buy today or pretty much any time within the next several months.

Normally, we'd be able to buy a second home in our target area for $350,000 or less. But right now, homes that would normally be listed around $350,000 are being listed and sold for $450,000. And that's not a price we're willing to pay when we can instead just sit tight until the market cools off.

Paying $100,000 more than what a home is worth isn't just a bad investment. We might struggle to get a mortgage if we pursue a home that's overpriced and it doesn't appraise for a high enough value. And while we did do a good job of saving up a down payment, we're not in a position to buy a second home outright -- we need that mortgage to make it happen.

Waiting things out

Real estate agents make money by selling homes and helping buyers purchase homes. So when an agent tells you point blank not to bother looking and to come back many months later, it means something.

I'm grateful our agent was honest with us about the state of the market. And while it's frustrating to have worked so hard to save for this goal and have to put it off, I know it's the right move financially. Besides, we can still visit the area we want that home in and enjoy ourselves from the comfort of someone else's rental property. And who knows? Maybe by next summer, we'll be signing a mortgage of our own.