The Misconceptions about the right time to buy: A Texas Realtor's Take
Our obsession with short-term thinking and headline-making often delivers an enormous price at the expense of calm, rational thinking.
Are you considering buying a home in Texas but unsure if now is the right time? As a Texas Realtor, I am here to tell you that the recent surge in buzz claiming that it is not a good time to buy a home is misguided. Below, I will be debunking some of the most common misconceptions about buying a home right now, and why now might be the perfect time for you to take the plunge.
Buzz #1: Interest rates are going to rise so you should wait
This is true and they will probably go higher.
More than likely they will dip too, over time. Securing financing now may be easier than securing it later, should bank requirements be tightened, or if you should lose a job. Rates will rise and remain higher as long as inflation is higher....which also implies that everything needed to build a house, including labor, will rise too.
Combine construction being down with a decade-plus of under-building: the demand vs. supply ratios could be much, much worse, triggering price hikes and more multiple bidding over (higher) asking prices, when the economy rebounds.
BUZZ #2 The prices will come down if you wait
This is possible, yes, and in some areas they have already. Timing 'the bottom' is always difficult. So if prices have come down, being able to select the best property at a fair price may still be better than buying what is left over once prices really hit bottom and the markets are much more competitive. With fewer buyers in your area, the ability to negotiate is stronger now (in several areas around 7%). If you're renting now at $4,000 per month, while buying would cost $5,000 per month, over 3 years, you will have spent about $150,000 on rent (assuming 2% annual rent escalations). In those same 3 years you'll have grown your equity in the home, and benefitted from the mortgage interest and real estate tax deduction.
What if you are wrong about prices coming down in a super-low inventory environment? What if they stay the same....or rise? All areas are different....
BUZZ #3 A recession is coming
That is a certainty, and it always is, but hard to say if that will happen a month from now, maybe a year, or several years from now. In a recession, unemployment usually rises, but even really bad recessions have about 10% unemployment, which means 90% remain employed, earning and spending, and 100% of everyone continues living.
Life does not stop in a recession. Growth slows and decelerates. Everyone has to live somewhere. Rents are high too. The demand to rent actually grows during most recessions. Recessions also usually deliver lower interest rates as the FED tries to stimulate more borrowing and growth.....which could allow you to refinance and lower your mortgage payments too.
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