As we move into the second half of 2024, the housing market has undergone significant changes, leading many people to ask “Should I buy a house now? Or should I wait?” Mortgage rates have recently fallen to their lowest level since April 2023, but home prices remain high, and future trends are still influenced by Federal Reserve policies. Before you decide to buy a home, even if it’s inside Trenton, NJor Bridgeport, CTit’s important to check your financial stability, job security, credit score, and down payment savings. Read on to find out if you should buy a house now or wait.
What does the housing market look like in 2024?
Before deciding whether now is the time to buy (or not) let’s break down the latest macroeconomic changes and what they mean for consumers.
Housing prices
As of late, mortgage rates have come down. On August 5, the the daily average for 30-year fixed-rate mortgages fell to 6.43%the lowest rate since April 2023. Although housing prices have also declined, future housing prices will still be shaped by Federal Reserve policies. Investors expect rates to decline gradually, but significant declines beyond current levels are unlikely. Since inflation is the main reason for high rates, potential changes in the economy may lower rates further. It is important to carefully consider whether to lock in the rate now or wait.
Home furnishings and affordability
Although mortgage rates have dropped recently, many buyers remain cautious. Some are holding back, expecting mortgage rates to drop significantly after the Federal Reserve’s expected rate cut, while others are waiting for clarity on new rules from the National Association of Realtors (NAR) or the outcome of the upcoming presidential election.
Despite this uncertainty, home listings are showing signs of improvement, with new listings on the rise 3.7% year-on-year and total inventory up 16.6%. This expanding inventory, fueled by lower mortgage rates, gives buyers more choice, even though pending sales fell 8.4% last year.
Questions to ask yourself before buying a house or waiting
Before you decide whether buying a house is right for you, make sure you ask yourself these five questions.
1. Are you currently in debt?
When you apply for a home loan, lenders check your income-to-income ratio (DTI)which represents the portion of gross monthly income that is used to pay off debts. This ratio helps lenders determine how much you can borrow by considering the total percentage of your income allocated to monthly payments.
2. Are you ready to put down roots?
Imagine that you plan to live in the city where you are thinking of buying a home for a long time. In some places, renting may make more financial sense than buying. Weigh your personal goals and the financial implications of renting versus buying based on your long-term plans.
3. Do you have a job guarantee?
A mortgage is a significant financial obligation, and losing a job can cause additional stress. If there is a possibility of a layoff, it may be wise to delay buying a home.
4. Do you have good credit?
Lenders often offer the best mortgage rates to people with credit scores of 750 or higher, although you may qualify for a lower score. If your credit score is on the lower side, it may be wise to delay buying a home until it improves.
5. Do you have enough money saved to pay?
Having enough cash for a down payment is important before buying a home. In most cases, it is recommended that you set aside 20% of the purchase price, although this can vary.
Should I buy a house now or wait: conclusion
In summary, the housing market of 2024 presents a mix of opportunities and uncertainties. With mortgage rates at their lowest in months and mortgages rising, buyers have more options than in recent years. However, factors such as possible future rate cuts, regulatory changes, and political events add complexity to the decision-making process.
To make an informed choice, prospective buyers should carefully evaluate their financial readiness, long-term plans, and market conditions. Whether you choose to act now or wait, staying informed and considering your personal circumstances will be key to navigating the ever-changing real estate landscape.
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