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Homeownership has long been a cornerstone of the American Dream and, despite recent economic hardships, remains a coveted goal for most Americans. Concerns about current market conditions, including high interest rates, rising home prices and limited inventory, create barriers that indecisively hold sellers back and discourage buyers from entering the market.
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But according to data from LendingTree: 84 percent of young Americans Many non-homeowners have expressed a desire to buy a home in the future, indicating that homeownership remains appealing and demand remains strong. So what’s a potential homebuyer to do?
A recent report from RE/MAX shows a steady increase in home sales and new listings, and home prices may stabilize. National Housing ReportThe number of new property listings in May 2024 increased 15.1% year-on-year. Home sales are also on the rise, up about 11 percent from April.
While sales typically increase before summer, the consistent upward trend over the past four months indicates the market is thriving. Additionally, inventory recorded its largest year-over-year increase, increasing 39.6% from May 2023. This means more homes are available for sale, which is good news for buyers.
As the housing market changes, many people are wondering, “Should I buy now or wait?” Unfortunately, there is no one answer that fits all. As real estate professionals, our job is to guide our clients through the homebuying process, educate them about the intricacies of our local market, and help them determine when is the right time to purchase a home.
The myth of perfect timing
The idea of waiting for the perfect time to buy a home is appealing, but it’s not new. I’ve been in the industry for nearly 30 years and have seen many clients put off buying in the hope that interest rates would fall or home prices would drop. Conversely, I’ve also seen people jump into the market at the first sign of rising prices, fearing that if they wait, it will become too expensive for them to afford.
Owning a home is an investment in your future, and while interest rates may not be attractive right now, you can always refinance later if rates drop.
So it’s good to explain why waiting for the perfect time is often counterproductive. The housing market is influenced by a variety of fluctuating factors, including economic trends, government policies, and world events, making perfect timing nearly impossible. Clients who wait for the perfect time risk missing out on an opportunity or making a hasty decision based on fluctuating market conditions.
Instead, we emphasize the importance of making informed decisions based on their personal readiness and long-term goals. We encourage our clients to focus on their financial stability, their current needs, and their plans for the future. In doing so, we can help our clients make confident, sound investments that are right for their unique situations, regardless of market uncertainty.
Prepare, Set, Buy: Personal Preparation is Key
Instead of obsessing over market conditions and daily fluctuations, home buyers should shift their focus to whether buying a home makes the most sense for them. A simple way to encourage this shift in focus is to provide your clients with a checklist to assess their financial readiness, including:
- Are they financially stable?
- Do you have a steady income and a good credit score?
- Have you saved enough to cover the down payment and expenses?
- Do you have enough savings to cover the unexpected and unexpected expenses?
These factors play a key role in determining whether now is the right time to buy a home.
Homeownership is about more than just financial preparation. Potential buyers need to think beyond savings and figure out all of their monthly expenses. Understanding a budget and price range that will allow them to build equity while preparing for other major financial milestones, like retirement, child rearing and education, is essential.
Encourage your clients to get pre-approved, determine their eligibility, and understand if private mortgage insurance (PMI) will be required. This gives you a clear understanding of your clients’ purchasing power and any financial adjustments they may need. If your clients aren’t ready to get into the market yet, it’s a great opportunity to learn about the process and get their finances in order while they wait.
Market Insights: Knowing When to Hold
While focusing on your client’s homebuying readiness, it’s also important to consider current market conditions. Knowing what’s happening in the market gives you the tools you need to guide your clients to make informed decisions. For example, if interest rates are very low, it may be a good time to lock in your rate. If home prices in your area are rising quickly, you may want to consider whether that price fits into your budget and long-term plans.
There’s been a lot of talk about whether the Federal Reserve will cut interest rates this year, but we’re not seeing any big changes yet. Buyers who are waiting for big rate cuts to get into the market may need to adjust their strategy if they want to purchase a home soon.
Advise your customers not to succumb to market pressures and rush into a purchase. The industry can change quickly, and being open to different scenarios can help you find the best deal. This might mean adjusting your customers’ expectations or considering a different region.
What’s best for your customers?
Navigating the complexities of the housing market can be daunting for your clients, which is where your expertise is crucial: providing insight into market trends, explaining current conditions, and guiding them through the buying process with access to critical resources and data.
Because buying a home is one of the biggest financial decisions of most people’s lives, real estate professionals need to guide their clients with clear, timely advice — helping them cut through the market noise to make smart decisions and serving as trusted advisors to secure their clients the home that’s best for them.
Homeownership, the American dream, is as alive as ever. So the question remains: is now a good time to buy? For many, with the expertise and guidance of a real estate agent, the answer this year will be a resounding “yes.”
Amy Lessinger is president of RE/MAX LLC. LinkedIn.
