Should I Buy Now or Wait?

As interest rates, inflation, and home prices continue to rise, it’s not uncommon to question if you should buy now or wait for decreases in the market.

While factors like increasing interest and mortgage rates may create a sense of uncertainty for those looking to purchase a home right now, buyers need to know that higher interest rates will not always signal lower housing prices—especially in a market that is in as much demand as Austin’s.

In fact, this is the first month the?Austin Board of Realtors ?reported that the median home price in the Austin area came in at over $500,000. We understand that purchasing in Austin can feel tough right now.?

It’s not uncommon to question if now is the right time to buy or if you should wait until the market settles. As a brokerage, we spend time studying how the market has trended to help you make an informed decision that is right for you and your family. Keep reading to review the costs of waiting.?

What’s the Cost of Waiting?

Many buyers might be waiting to buy in hopes of seeing interest rates and home prices go down. It is always important to remember the appreciation of homes in the Austin market. Compare the monthly payments on a $500,000 home today vs waiting 6 months to 1 year

In this table the only variable is mortgage interest rate increasing over time with home price remaining the same. In March, for the first time in nearly four years, the Federal Reserve increased the price of borrowing money by a quarter-point and announced plans to raise rates six more times this year. The following mortgage rate shown is as of Monday, May 2, 2022 from?Bankrate.com . The current rates in Texas are 5.35% for a 30-year fixed, 4.59% for a 15-year fixed, and 3.81% for a 5/1 adjustable-rate mortgage (ARM).

On average, Central Texas home prices increase 6% every 6 months (~12% in a year). In this model, even if mortgage interest rates remain at today's rate, the cost of waiting increases over time.

What is predicted? Inventory is still limited, so there is still buyer demand. This demand will continue to increase home prices. Mortgage interest rates are also predicted to rise. If you are hedging your bet on waiting six months to a year, the cost of waiting could be even greater.

There is a cost to waiting in all scenarios. Even if home prices go down and mortgage rates increase, buyers will still be paying more in the future. The only way to win would be to see home prices decrease and mortgage interest rates decrease. We cannot predict if this would ever happen or how long it could take for this to happen.

According to?Bankrate.com , as of Monday, May 2, 2022, current rates in Texas are 5.35% for a 30-year fixed, 4.59% for a 15-year fixed, and 3.81% for a 5/1 adjustable-rate mortgage (ARM). Mortgage rates seem to be steadily increasing, and experts predict this trend will continue throughout the rest of 2022.

In addition,?Forbes ?reports that the Federal Reserve may hike interest rates 6 more times this year. It is very possible that if you are waiting to see if you can pay less, you will end up paying more.?

For those waiting to purchase a home for fear that the increase in home value and pricing is temporary and they may lose money, the history of the market should soothe those concerns.

According to data reported by the?Federal Housing Finance Agency , of all the major cities in the US, Austin is the only city that shows only one year of negative appreciation over the past 20 years. If you are a seller watching your home’s value grow, now is the perfect time to receive an?estimate on your home’s worth .?

Austin is also the number one housing market for growth and stability, according to?CultureMap . This further illustrates that buyers should have a sense of confidence in the market, as job creation and economic growth continue to trend upward.?

For buyers looking to get more of their wants in a home in terms of size and price, being flexible with location is one of the ways to expand your options in a competitive market like this one.

Some of the best places for?first-time buyers in Austin ?are near the city outskirts, and these areas are seeing incredible growth and demand. According to?Community Impact , Round Rock, Pflugerville, and Hutto are seeing an increase in home sales. Pflugerville home sales increased a rapid 15% from January to February, and sales in Hutto increased 29.79% in that time.?

You have the power to decide if now is the right time to buy in Austin. Working with an?experienced agent ?can be the key to understanding market changes and ensuring you meet your real estate goals. We are here to guide you every step of the way.?

https://www.realtyaustin.com/t/janine-mitchell/blog/should-i-buy-now-or-wait