As home prices and interest rates continue to rise, and as homebuyers continue to face highly competitive multiple-offer situations, a common question we’re getting these days is if it’s still a good time to buy.
We don’t think there’s a clear-cut, definitive answer to this question. All of this depends on your personal situation and long-term goals.
For us, we did feel like it was the right time to buy, and we’re excited to announce we’re under contract to purchase our first home!
A driving factor for us buying right now is our desire to build equity in real estate. Contrary to traditional wisdom, we personally don’t think buying a house is the default automatic best investment for everybody out there. But for the long-term road map we’ve set out for ourselves, this was the right choice for us.
Like other buyers out there, we too had to face a housing market in which prices are at historical highs. To deal with this, our perspective was to think long-term. We wanted to find a house that we could see ourselves in for the next 7-10 years. This also meant that we wanted to be in a location with proven desirability (i.e. demand) so that if market prices do dip, we’d feel confident they’d rebound.
We were also lucky that interest rates dipped slightly when we went under contract. As of the time of writing, 30-year fixed rates are around 6.0%. However, the par rate we were offered by our lender when we locked was 4.75%. We decided to pay discount points to get it down to 4.625%. We did the math and determined we only needed to stay in the house for at least 2 years for it to be worth it to buy down the rate. Again thinking long-term, it was a no-brainer to pay the points.
Lastly, we were also kind of fortunate that the house we were interested in didn’t have any competing offers, something that’s extremely rare in today’s market. I think the main reason for this was that the home was probably overpriced given its style and age. But as Realtors® we could tell the house was well maintained, and it had good bones for us. Since we plan to be in the home for at least 7-10 years, we don’t mind having to do kitchen and bathroom renovations to get it more to our taste. Moreover, this is sort of an advantage to us, since we’ll get to customize the home, rather than having a cookie-cutter builder home.