Is now the time to buy a house? How to know + 2023 market overview

Published Date: September 28, 2023

A family stands in front of a home while considering “Is now the time to buy a house?”
Whether you’re searching for a primary residence or a second home, we know what question is weighing on your mind: Is now the right time? Due to economic and employment uncertainty, 79% of consumers believe the answer is no.So, is now the right time to buy a house? The answer depends on your financial stability, lifestyle goals, and your readiness to own a home.Read our guide to understand the housing market in 2023 and discover answers to questions that will help you know if now is the best time to buy a home — or second home.

Is it a good time to buy a house? 3 housing market factors to consider 

A graphic highlights 2023 housing market factors to consider when researching “Is now the time to buy a house?”
If you need to finance your next home purchase, there are three market factors you should consider.

1. Mortgage rates

Despite last year’s dip, current U.S. mortgage rates are generally around 6%-7%. Although these numbers appear higher than in previous years, the national mortgage rate was above 7% in December 2022. 

2. Median home prices

The current national median home price is around $380,000, a 4% increase from last year. Given the momentum of increasing housing prices, now might be an opportunity to secure a home before the price increases, as they have done historically.

3. Home supply

Housing has been in short supply for over a decade, and this year is no exception. A 14% increase in construction costs is also keeping builder confidence low, preventing new homes from entering the market.

When should I buy a house? 7 questions to ask yourself

A graphic lists seven questions to ask yourself when considering “Is now the time to buy a house?”
Mortgage rates are up, home prices are steadily increasing, and home supply remains stagnant. So, is now a good time to buy a house? That depends on how you answer the following questions.

1. What is motivating this purchase decision?

Whether this purchase is for your first or second home, consider what is motivating the investment. Potential answers could include:
  • I’m ready to stop paying rising rent prices.
  • My family is growing and I need more space.
  • I want to live in a specific neighborhood.
  • I want to be closer to good schools.
  • I’m ready to buy a vacation home.
  • I want to make memories with my loved ones.
Although owning one or more homes cannot guarantee that you’ll benefit from equity, understanding your motivation can help you determine if it’s a good time to buy a house in today’s economy.

2. How long will I live there?

Remember that a house is a real estate asset. The amount of time you plan on holding your property should be considered in your ownership. Mortgages can come with a 15- or 30-year fixed interest rate. If this purchase will be your new primary residence, there might be additional funding opportunities for you to explore. Or if you want to buy a second home to visit on occasion, factor other expenses such as property management into your budget.

3. Am I financially stable enough to purchase a home?

Purchasing a home is a large financial commitment, and lenders will examine your financial history before deciding to give you a loan. Review the following elements before you decide to buy a home:
  • Debt: Loans and credit card debt can take away from your housing budget. Attempt to pay off your debt before applying for a home loan.
  • Credit score: Your credit score will help determine what kind of funding opportunities you have while financing a new home. Aim for a credit score above 620, although a score above 740 would be ideal.
  • Savings: Before purchasing a home, reflect on how much money you need for an emergency fund and set it aside from your housing budget.
  • Investments: Ideally, you want to be financially secure enough to contribute to a retirement account and other investments before purchasing a home.
If you have lingering debt, a low credit score, little to no savings, or an empty retirement account, consider waiting to buy a home until you are more financially stable.

4. What can I afford to spend on a mortgage?

There are several factors that contribute to the cost of owning a home, but your mortgage payment will most likely be the largest chunk of your housing costs. Consider the following expenses while determining if now is the time to buy a house:Combine these costs with your living expenses to determine if you are financially stable enough to buy a home. If you already have a primary residence, use a second home calculator to determine how much you can afford to spend.Consider your salary when budgeting for a mortgage. A general rule of thumb is to aim for a mortgage payment that is no more than 28% of your yearly income. 

5. Do I have enough for a down payment?

Although most of the home can be financed through a mortgage, you will still be responsible for providing around 20% of the purchase price upfront. Depending on the cost of a home, primary and second home down payments can range from $10,000 to well over $100,000. While it is possible to find additional funding for down payments, this will increase your monthly payments. Try to save up the cost of the down payment before buying a home.

6. Do I understand the responsibilities of home ownership?

Owning a home is a major responsibility that requires a long-term commitment. You may need to sacrifice luxury expenses to pay your mortgage, maintenance, taxes and insurance. Although you will no longer be paying rent, keep in mind that owning a home does come with recurring expenses like utilities and repairs.

7. How will this affect my future financial goals?

Take stock of your future financial goals and reflect on how buying a house could affect them. If you will be financing your home, remember that you’ll have significant housing costs that may require you to curtail savings for things like children’s education and retirement. What’s more, these housing costs could require you to sacrifice aspects of your current lifestyle like vacation planning and spending habits. Consider if you are ready for this lifestyle change or if you are comfortable putting larger goals like owning a second home, on hold. 

When should I wait to buy a house?

A graphic explains when you should wait or buy a house while considering “Is now the time to buy a house?”
It may not be the best time to buy a house if other financial concerns are distracting from your housing budget. If the following factors are affecting the housing market where you want to live, it may be the ideal time to buy a house:
  • Home values are dropping
  • Inventory is increasing
  • Personal finances need to improve
  • Other investments need your attention
If you already own a home and are in the market for a second, fractional ownership might be a good option to consider — like the one offered by Pacaso. With this fully managed co-ownership model, you are able to enjoy a second home at a fraction of the cost with none of the typical second home hassles.So, is now the time to buy a house? The answer depends on external factors like mortgage rates and median home prices as well as your goals and the state of your personal finances. If you can afford the down payment and are ready for a new level of responsibility — as well as a new milestone in your life, it may be a good time to buy a home. But if home values are decreasing and your personal finances need improvement, consider waiting to buy a house.

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