Is now the right time to buy a home, or should you wait? This is a significant question for many people today. While the right timing for you will depend on various personal factors, here’s something you might not have thought about:
If you can afford to buy at current rates and prices, it might be more advantageous to focus on the amount of time you spend in the market, rather than trying to perfectly time your purchase.
The Downside of Trying To Time the Market
Timing the market isn’t a reliable strategy because conditions can change unpredictably. Take this example: for most of this year, forecasts have predicted a decrease in mortgage rates. Although experts still believe this will happen, various market and economic factors have delayed the expected timing. This has affected homebuyers who have been waiting on the sidelines. As U.S. News states:
“Those who put off buying a home during the past few years as they were holding out for lower mortgage rates have been left out of the market . . . mortgage rates have stayed higher for longer than previously expected, keeping monthly housing payments elevated. In other words, affordability didn’t improve for those who chose to wait.”
This illustrates why trying to time the market may not be advantageous if you’re ready and able to buy now.
The Proof Is in the Pudding: The Benefits Homeowners Gain from Increasing Home Prices
Delaying your purchase also means missing out on the equity you could gain by buying now. The potential equity gains might surprise you.
Every quarter, Fannie Mae publishes the Home Price Expectations Survey, which gathers predictions from over a hundred economists, real estate experts, and market strategists about home prices for the next five years. In the most recent survey, experts forecast that home prices will keep rising through at least 2028 (see the graph below):
To put these numbers into perspective, let’s examine what you could gain by purchasing a home now. The graph below illustrates how a typical home’s value might appreciate over the next few years based on the HPES projections:
For instance, suppose you bought a $400,000 home at the beginning of this year. According to expert forecasts from the HPES, you could gain over $83,000 in household wealth over the next five years. That’s a significant amount.
This data highlights why time in the market is so important.
The Essential Advice for Those Ready and Able to Buy Now
You might be focused on current mortgage rates and their effect on your monthly payment, but don’t overlook home prices.
Prices are expected to continue rising, albeit at a slower pace. While this moderate increase might seem daunting now, once you own a home, that growth will become a significant advantage. This is where the concept of time in the market comes into play.
Attempting to time the market means potentially missing out on equity gains in the meantime. If you’re ready and able to buy now, you need to ask yourself: is waiting really worth it?
Instead of trying to time the market, it’s more beneficial to have time in the market.
As U.S. News Real Estate aptly states:
“There’s never a one-size-fits-all answer to whether now is the right time to buy a home. . . . There’s also no way to predict precisely what the market will do in the near future . . . Perfectly timing the market shouldn’t be the goal. This decision should be determined by your personal needs, financial means and the time you have to find the right home.”
Bottom Line
If you’re deciding whether to buy now or wait, keep in mind that time in the market is more important than timing the market. If you’re ready to start building equity and want to take the next steps, let’s connect and make it happen.
