By Daisy Casillas, 1% Real Estate Broker
When Is the Best Time to Buy?
In 2022, buyers suddenly bowed out of the housing market when interest rates rose. Interest rates of 6% to 7% seemed really high. But were they? Roughly 6 to 7 years ago, interest rates were at that same level, and no one batted an eye! So why back out? Because buyers on the market today typically weren’t on the market to buy 6 to 7 years ago so they aren’t aware we’re back to “normal” interest rates. Everyone simply became accustomed to the news touting “historically low interest rates!” and “now is the time to buy!”
But was it? WHEN is the best time to buy? Is it based on interest rates or the price of the home?
Interest rates will always rise and fall. But home prices typically always RISE. Think about home prices in the early 2000s, 1980s, 1960s, 1940s! Much cheaper as we go back in time, right?! Of course! The time to buy is always NOW! The longer we wait, the higher the prices. Buyers may not have their ideal interest rate now, but you nearly always have your best purchase price today. You can refinance later when interest rates drop. But we cannot go back in time for 1990s prices. If only! “The best time to buy was yesterday” isn’t a real estate axiom to try to trick people into buying; it’s simply a historical reality.
Even Rents Rarely Go Down
If I could go back in time, I would have purchased a home in my early 20s rather than continuing to pay rent – which is paying for a mortgage AND maintenance costs for someone else. Rents continued to rise in the 1990s, 2000s, and today. The demand for homes continues to remain high while rising construction costs and government restrictions on building means supply remains too low. What does that do to housing cost? It raises it for buyers AND renters. Renters don’t have much choice – their rents will rise with the cost of living, rise of property taxes, and supply and demand. That lack of control over one’s finances is disconcerting. A homeowner’s mortgage, however, remains the same on a fixed rate loan for 30 years!
Your House Makes You Money
A middle-class home in my youth averaged $150,000 in Washington state. Can you imagine that?! If I had bought when I was younger – even if it was a small house that I outgrew – selling it later means I sell at a much higher price. That’s called “appreciation” and it’s REAL MONEY at closing that I didn’t have to labor for! Based on buying a home in 2018 and selling in 2023, you could have made approximately $26,000 per year for 5 years in a row. That’s real money at closing you could have used to purchase a larger or more ideal home. Even if you, say, get married and live with your new spouse and don’t need a second home. Guess what? You can sell it and not only recoup all the money you paid towards your loan (unlike a renter!), you’ll also MAKE MONEY FROM THE APPRECIATION – ENJOY! 😉 What are you going to do with all that extra cash? Put it towards retirement? Vacation? Children’s education? Start a business?
Make an Informed Decision
Are you unsure if you qualify for a home purchase? Most people don’t know until they connect with a lender to find out. Make an informed decision rather than believing you can’t do it! It costs you nothing to find out and could lead to all of the huge benefits of homeownership, including tax benefits and quality of life. Contact me today and I’ll connect you with a mortgage broker with 30+ years of experience. Call or text me at (206) 866-8090. Email me at email@example.com.