9 Essential Tips for Buying a Home When it's the Worst Time to Buy
Follow these smart strategies from pros.
It's an unfortunate home truth: If you're looking to buy a house right now, experts say it's not the best time. In fact, it's objectively pretty terrible. Interest rates are at a 22-year high, making mortgage payments more expensive. In many areas, inventory is low, as homeowners elect to hang on to their properties and postpone moving until rates decline. It's now 52% more expensive to buy a home than rent, leading the Wall Street Journal to declare "there's never been a worse time to buy." But making that key purchase is not impossible. These are nine expert tips for buying a home in a less-than-hospitable era.
In an August 25 episode of the National Association of Realtors' Real Estate Today podcast, Bill Armstrong, a realtor in Frederick, Maryland, suggested that current homebuyers consider obtaining an adjustable-rate mortgage. Because rates are at decades-long highs, they're likely to come down in the next year or so.
University of North Texas real estate professor John Baen, Ph.D, told CBS News this month that now is actually a great time to buy a home because prices will only keep rising. But you have to be ready to move fast. "You've got to be quick, and you can't sit around, because if the house is priced properly—less than $400,000—it's sold in a matter of three or four days," he said.
Baen said more buyers tend to be in the market during spring and summer, because families generally want to move house before the school year begins. Lower competition in the cold-weather months could work to your benefit.
Armstrong suggested working with a realtor who invests in real estate but isn't actively looking for a new property. This means they know the market well but aren't considering deals for themselves first.
"Mortgage rates vary from lender to lender. While your first instinct is to go with a bank you're already established with, you might want to shop around and get estimates from a variety of lenders," recent homebuyer Catherine Wilson wrote on My San Antonio in May. "Your rate depends on a number of factors, such as how much you plan to put down, your credit score, loan amount, and loan type. Exploring your options can even allow you to lock in rates for a time period while you search for your forever home."
"Given how expensive a brand-new home is and where mortgage rates are, builders are trying to ease some of the burden off the buyers and make the sale by offering generous incentives," said Wilson. "They could provide a discount on the overall cost of the house, money to put toward closing costs, and may even buy down your mortgage rate."
Sometimes the best time to buy a house is when you need one because of a move or life change, not because of interest rates. "The housing market—like so many other markets—is almost impossible to time," Orphe Divounguy, senior macroeconomist at Zillow Home Loans, recently told Forbes. "The best time for prospective buyers is when they find a home that they like, that meets their family's current and foreseeable needs and that they can afford."
Waiting for better days isn't always possible—or productive. "More often it seems the case that home prices generally keep rising, so the goalposts for amassing a down payment keep moving, and there's no guarantee that tomorrow's conditions will be all that much better in the aggregate than today's," said Divounguy. "Getting on the housing ladder" will help you build equity and net worth, she added.
It's a well-known saying in the world of home financing: You marry your home, but you date the mortgage rate. Once the Fed lowers interest rates, refinancing your mortgage to a more favorable APR is an option as long as you've been consistent on your payments and have kept your credit score in good shape.