Now, we're talking about, should you buy a house now or wait? Now the difficult thing is there isn't one answer that applies to every single person, but I'm going to walk you through some questions that you need to ask yourself both about your internal position and externally what's going on around you to see if buying now is a good decision.
So we're going to cover when the market matters. Number two when the market doesn't matter to you and why rushing can be a terrible idea and get you in some hot water.
So first let's talk about some of the external things that we need to consider going on in this specific market. So externally what's happening in the market around you. That's going to affect your decision when you're buying.
This huge problem we're facing as home prices are inflated. And we've been seeing this over a period of months where home prices have continued to go up. Now, the issue here is nobody knows how much further they're going to go up, but at some point, we're expecting that to come down.
Now we're also in a seller's market, so the sellers have control. The difficult thing here is that means there's low inventory and prices might continue to go up. It's difficult to say.
Also, you're facing this high competition and overbidding where it's difficult when you put in an offer because there are multiple offers on that same home that you want and people are overbidding for the home. So home that might be worth 300,000 people are bidding $330,000, just to be able to get that property.
So we're expecting a correction and the correction would be when the market moves in cycles, it goes up and down, right? Every market is going to move. And down the question is just, when is that going to happen?
Nobody really knows, but we know that we're at the top there's a bit of a bubble happening and eventually, we're going to expect the market to correct. Or some people would call it a crash down.
Now, the big thing to keep in mind is every single thing is based on opinion, all the videos about when to anticipate, or what to anticipate are all based on opinion, based on history. Nobody knows the exact answer.
Now there is the potential of purchasing and prices going lower. So what could happen here is if you purchase right up at the top and the price has moved down. You might have negative equity in your home, or it might be difficult to sell your home and be able to pay for the cost of selling.
So that could trap you in that home. So what's, what you need to be careful of in this market is not planning on being in a home for a short period. If you're going to purchase now, you need to plan on being in that home for a longer period of time. So you have that flexibility built-in.
Because of that, there's a higher risk of purchasing in a market like this. When it's a very heavy seller's market, you have a higher risk of purchasing as a buyer.
Now, before we talk about some of the internal things we need to consider, let's have a #CalmMoment. So when you're stepping into the role of real estate, it's really frustrating when you have everything moving forward and you're excited to get into this, but then all the external factors just aren't lining up. You did all the work that you needed to, but you go and submit an offer and there are 11 other offers. That can be incredibly overwhelming.
And normally people have one of two reactions either they throw in the towel and say, I'm done with this. I'm giving up and just going to continue renting or they make an impulse purchase that they're going to end up regretting later.
So what needs to happen here instead of making one of those two choices is you actually need to take a time to buffer all the emotional complexity that's happening and slow down. It's just like when you make a decision, you take a full breath beforehand. Because slowing down and allowing ourselves to think through things and process things helps us make a smarter choice moving forward. So take a moment to slow down.
Now let's consider some of the internal things when you're considering, should you buy now or should you.
So one of the first things is, are you comfortable buying and weathering COVID? We don't know how much longer this is going to last. And it looks like in the US we might be approaching the third wave with COVID. So are you comfortable paying for a down payment and closing costs and any maintenance, repairs, furniture, and everything of a new home while also anticipating what could happen with COVID?
Are you secure with your job? Is your income potentially going to decline? Because if it's that, then maybe you need to wait that out a little bit. And whether this pandemic.
Also, is your high-interest debt paid off. So a good example of this is credit cards. So there's no point in purchasing a home while having a debt that's in like a 15% plus range.
Your money is going to be better spent instead of on a down payment, paying off high-interest debt.
Also, do you have a good credit score? And I think a good place to start looking for a good score to start looking for a home is a 640 and above. If you have lower than that, you're probably going to be spending a lot more because your interest rates going to be higher, it's going to be better for you to spend your money paying off debt, to get your credit score up.
Do you have money saved up? So money for the down payment and closing costs. And also, do you have. And reserved for if you have an emergency, if there's a maintenance emergency or something needs to be fixed in the home for furniture, or moving costs, it's not just the down payment.
A lot of times people don't really have the figure in mind and they just assume they'll figure it out along the way. And I promise that's going to be incredibly stressful. You need to know what that number is. That's going to account for everything in your home purchase and make sure you have that saved up before you move forward.
Also, do you know your budget? A lot of times people want to focus on other people to determine their home buying budget for them. But the thing is, you're the only person who knows your budget and lives your budget day today.
So ultimately you're the only one who knows what that number should be. So you need to figure out what is your hard-stop number for how much you're going to spend on a home monthly. Also account for things like utilities. If you're purchasing an older home, you need to have a little bit more set aside for you, your utilities. You have to keep these things in mind and understand that just because you see one number referenced on Zillow, doesn't mean that's what you're actually going to spend monthly on that home.
And then finally, where are you at emotionally and logistically with your family? So if you have patience, you might benefit, and you might be rewarded by waiting. Now, some people have to move immediately because of a job or because of family or some other circumstances going on.
But if you have the patients, if buying a home is a little bit more on the, we want to sign and said the needs, who side, then you might be rewarded by waiting and potentially seeing when the market is going to correct.
So the best thing that you can do is go through these external and internal factors and see are actually ready, do you feel like everything is lining up to where it's going to be a seamless process. If you're trying to shove everything in and trying to force it to work, then now might not be the best time, and that's okay.
So work on these internal factors and then once you get all this done, we might not be in a position where the external factors are starting to align up and you can jump on that opportunity.
The last thing you want is to see the market, get to the position now beneficial to buy, but you weren't ready internally because you threw in the towel and gave up.
So focus on these internal things and focus on these external things and see what can you do, what's within your control to get yourself ready to purchase, and then be ready to sit and wait, if you need to jump on the right opportunity.
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