A Fannie Mae survey found that a record number of buyers think it’s a bad time to buy a home. But is it? Even experts stumble with market predictions.
WASHINGTON – “It’s a bad time to buy a home.” This summer, more Americans held that view than any time since 2002, the first year that mortgage agency Fannie Mae started its “Home Purchase Sentiment Index.”
High prices and rates are souring many would-be buyers. But in April, home prices nationally posted their first year-over-year price decline in 11 years, according to the S&P CoreLogic Case Shiller National Home Price Index.
And some metros, like Seattle and San Francisco, are seeing double-digit drops.
A downward price progression, though, begs the question: “If I buy now, will my home price slide later?”
“Timing the market can be very difficult,” says Selma Hepp, chief economist for CoreLogic, a real estate data firm.
Personal Timetable Financial planners routinely advise buyers to consider timing – not when to jump in the market, but their own personal plans of how long they think they’ll be staying in the home.
“Even if prices continue to go down in the short term, if you can afford the home at the current price and plan on being there for a few years, I think you’ll be just fine,” says DJ Hunt, a certified financial planner with the Melbourne, Florida, firm Moisand Fitzgerald Tamayo, LLC.
Ultimately, prices in a market depend on what buyers can pay. That’s why “it is important to pay attention to economic conditions of an area, such as job creation, population growth and income growth,” explains Hepp.
In Bastrop, Texas, about 30 minutes east of Austin, real estate agent Judah Ross says, “we’ve seen about a 10-15% drop in prices which can be directly correlated with interest rates.”
He has buyers, especially first-timers, who were knocked out of the market during the earlier boon. Continued business expansion, from firms like SpaceX give buyers confidence that values will reverse course, he adds.
Still, not everyone with a down payment and a home buying wish should buy, cautions Hunt. “Especially if you are moving to a new city where home prices are declining, I would advise renting for at least a few months … people shouldn’t feel rushed into buying.”
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