But here’s what you need to remember. While housing market conditions are certainly a factor in your decision, your own personal situation and finances are also important. As an article out NerdWallet say:
“Trends in the housing market provide an important context. But whether this is a good time to buy a home also depends on your financial situation, life goals, and willingness to become a homeowner..”
So, instead of trying to time the market, focus on what you can control. Here are a few questions that can give you clarity on whether or not you are ready to make your move.
1. Do you have a permanent job?
Buying a house is a big commitment. You are going to take out a home loan, indicating that you will repay the loan. Knowing that you have a reliable job and a steady stream of income is important and will give you peace of mind for such a major purchase.
2. Do you know what you can afford?
If you are receiving a reliable salary, the next thing you need to figure out is what you can afford. This depends on your budget, spending habits, debts and more.
At this point, it helps to talk to a trusted lender. They can tell you about the pre-approval process and what you qualify to borrow, current mortgage rates and your estimated monthly payment, closing costs, and other expenses you’ll want to budget for. This way you have a good idea of what to expect.
3. Do you have an emergency fund?
As you crunch your numbers, you want to make sure you have enough cash left in case of an emergency. Think about it. You don’t want to put too much strain on the house and then not be able to weather a storm when one comes along. It is not a fun topic, but it is an important topic. As CNET says:
“You want to have a financial cushion that can cover several months of living expenses, including mortgage payments, in case of unforeseen circumstances, such as job loss or medical emergencies.”
4. How long do you plan to live there?
It was mentioned above, but buying a house comes with some upfront costs. And while you’ll get that money (and more) back as you gain more equity, that process takes some time. If you plan to move again soon, you may not recoup your entire investment.
How long would you have to stay in an ideal world? Lawrence Yun, chief economist at the National Association of Real Estate Agents (NAR), explains:
“Five years is a good, comfortable limit. If the price of your house increases significantly in value, then even three years is fine.”
So think about your future. If you’re going to live there for a while, it might make sense to go for it. But if you’re looking to sell and move in the next year or two because you’re planning to move to a new city with the promotion you’ve worked so hard for, or if you anticipate having to move to take care of your family, those are things you need to consider.
5. Do you have a team of real estate professionals?
If you do, great. But if you don’t, finding a trusted local agent and lender is a good first step. Having the right team can make figuring everything else out easier. The professionals can talk you through the options and help you decide if you’re ready to make the move, or if you need to get a few things in order first.
In short
If you would like to have a discussion about all the things you should consider to determine if you are ready to buy, contact a local real estate professional.
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