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Homeownership has long been a cornerstone of the American dream, and despite recent economic challenges, it remains a sought-after goal for most Americans. Concerns about current market conditions, such as high interest rates, rising home prices and limited inventory, are acting as roadblocks, keeping sellers on the sidelines and buyers reluctant to enter the market.
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However, according to LendingTree data, 84% of young Americans The unhoused expressed a desire to purchase a home in the future, underscoring the enduring appeal and strong demand for home ownership. So, what’s a potential home buyer to do?
Recent reports from RE/MAX show steady growth in home sales and new listings, and possibly even some stabilization in home prices. According to the latest news national housing reportData show that the number of newly listed houses in May 2024 increased by 15.1% compared with last year. Home sales are also climbing, up nearly 11% from April.
While we typically see more sales heading into the summer, the continued upward trend over the past four months indicates good market conditions. Additionally, we had the largest annual increase in inventory, increasing 39.6% from May 2023.
In the ever-changing housing landscape, many people ask, “Should I buy now or wait?” Unfortunately, there is no one-size-fits-all answer. As real estate professionals, our job is to guide our clients through the home buying process, educate them on the complexities of the local market, and help them determine the right time to buy a home.
The myth of perfect timing
The idea of waiting for the perfect time to buy a home is tempting, but it’s nothing new. I have been in this industry for nearly 30 years and have seen many clients delay home purchases in the hope that interest rates will fall or house prices will fall. Instead, I see others rushing into the market at the first sign of rising prices, fearing that if they wait, they will be priced out.
Owning a home is an investment in one’s future. While interest rates may not be attractive right now, people have the option of refinancing later if rates fall.
So it’s best to explain why waiting for the ideal moment is often counterproductive. The real estate market is subject to so many volatile factors, including economic trends, government policies, and global events, that it’s nearly impossible to time it perfectly. Clients who wait for the ideal time may miss out on opportunities or make hasty decisions based on volatile market conditions.
Instead, emphasize the importance of making informed decisions based on personal preparation and long-term goals. Clients are encouraged to focus on their financial stability, current needs and future plans. By doing so, you can help them make confident and sound investments that fit their unique circumstances, regardless of market uncertainty.
Prepare, Set, Buy: Personal Preparation Matters
Home buyers should shift their focus from focusing on market conditions and day-to-day fluctuations to whether buying a home makes the most sense for them. A simple way to facilitate this shift in focus is to provide clients with a checklist for assessing their financial readiness, including:
- Are they financially stable?
- Do they have a stable income and a good credit score?
- Have they saved enough for the down payment and closing costs?
- Do they have enough savings to cover any rainy day or unexpected expenses?
These factors play a crucial role in deciding whether now is the right time to buy a home.
Homeownership is more than just financial preparation. Potential buyers need to consider not just the savings but to really understand the total monthly cost. They must understand their budget and price range in order to build equity while preparing for other major financial milestones such as retirement, children, or education.
Clients are encouraged to get pre-approved to determine their eligibility and to learn if they need Private Mortgage Insurance (PMI). This can give them a clear understanding of their purchasing power and what financial adjustments may be needed. If clients find they are not ready to enter the market, now is the best time for them to educate themselves on the process and get their finances straightened out while they wait.
Market Insights: Know When to Hold Them
While focusing on your client’s readiness to purchase a home, you must consider current market conditions. Understanding what’s happening in the market can provide you with the necessary tools to guide your clients into making informed decisions. For example, if interest rates are very low, then this might be a good time for them to lock in their rate. If home prices are rising rapidly in their area, they may want to consider whether those prices fit within their budget and long-term plans.
There’s been a lot of talk about the Fed cutting interest rates this year, but we haven’t seen any major changes yet. Buyers waiting for a big interest rate cut to enter the market may need to adjust their strategies if they want to buy a home soon.
Advise your customers not to rush into buying due to market pressure. The industry is changing rapidly and being open to different scenarios can lead to finding the best deals. This might mean adjusting their expectations or considering different communities.
What’s best for your customers?
Navigating the complex real estate market can be daunting for clients, and this is where your expertise becomes invaluable. Gain a deep understanding of market trends, describe current conditions, and guide them through the buying process with access to key resources and data.
Buying a home is one of the largest financial decisions most people make, so it’s important for a real estate professional to be able to provide them with clear, timely advice. Help them rise above the market noise, help them make informed decisions, and work as their trusted advisor to get the home that’s right for them.
The American dream of homeownership is alive and well as good 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: yes.
Amy Lessinger is President of RE/MAX, LLC. Follow her on LinkedIn.
