The Best Time to Buy a Home? Yesterday. The Next Best Time? Today.
You’ve likely heard the saying, “Yesterday was the best time to buy a home, but the next best time is today.” This phrase holds true because home values continue to rise, and waiting for prices or mortgage rates to drop could cost you significantly in the long run.
While it’s natural to want to time the market perfectly, the reality is that home prices are still trending upward, and mortgage rates remain relatively high. If you’re holding off on purchasing a home, hoping for a perfect moment, here’s why you might want to rethink that strategy.
Home Prices Are Rising at a Steady, More Normal Pace
The idea that home prices will plummet is wishful thinking for most markets. The Home Price Expectations Survey from Fannie Mae indicates that industry experts predict prices will continue to rise through at least 2029.
While we’re no longer seeing the dramatic price surges of recent years, analysts project a steady and sustainable increase of around 3-4% annually at a national level. This means that instead of sudden, extreme jumps in home values, we’re moving toward a more balanced, predictable appreciation. That’s good news for buyers, as it signals a healthier market.
However, this gradual increase still means home values will be higher tomorrow than they are today. Here’s what that could mean for you:
- Homes will cost more the longer you wait. If you wait a year or more to buy, you may find that the home you could afford today is out of your budget in the future.
- A lower mortgage rate may not save you money overall. Even if rates decrease slightly, rising home prices could offset those savings, making the wait a costly gamble.
- Buying now lets you start building equity sooner. Homeownership is one of the most effective ways to build wealth over time. The sooner you buy, the sooner you start gaining equity as your property appreciates in value.
Let’s look at real numbers. If you purchase a $400,000 home today and prices continue to rise at an average of 3.5% per year, your home could be worth over $483,000 in just five years. That’s an increase of more than $83,000—money that could be building your wealth rather than sitting on the sidelines waiting for a market shift.
Inventory Challenges Will Keep Prices Elevated
One of the reasons home prices continue to climb is the ongoing shortage of homes for sale. While inventory has improved slightly compared to last year, it’s still not enough to meet buyer demand. According to Redfin, home prices are expected to increase at a similar pace in the second half of 2024 because there simply aren’t enough new listings to balance the market.
Although some local markets may see fluctuations, a widespread national price drop isn’t expected. Buyers waiting for a significant decrease in home prices may be disappointed, as supply and demand dynamics continue to push values upward.
Time in the Market Beats Timing the Market
The key takeaway? Trying to time the real estate market perfectly is nearly impossible. Instead, long-term homeownership rewards those who enter the market and stay invested.
If you’re debating whether to buy now or wait, consider these strategies to make homeownership more attainable:
- Expand Your Search: Consider different neighborhoods, smaller homes, or alternative property types like condos or townhomes.
- Explore Financing Options: Work with your lender to discuss mortgage buydowns, adjustable-rate mortgages (ARMs), or other loan programs that can help lower your monthly payments.
- Take Advantage of Assistance Programs: Many states and local governments offer down payment assistance programs that can help reduce upfront costs.
Bottom Line: Buying a Home Is a Long-Term Investment
Waiting for the perfect scenario may lead to missed opportunities. While market conditions may fluctuate, real estate has historically appreciated over time, making it a strong long-term investment. The sooner you buy, the sooner you start benefiting from equity growth and home appreciation.
If you’re thinking about buying, reach out to a local real estate expert who can provide insights into your specific market. Whether you’re ready to make a move now or just exploring your options, having a plan in place will set you up for success.