This may be the worst time to buy a house – here’s why

Back in 2020, buying a house can place buyers in a competitive demise due to the state of the housing market. Though mortgage rates have hit a higher range in the new year, they remain near significant lows. The average interest rate on a fixed rate of a 30-year mortgage is set at 3.77%. Considering that the annual percentage rate is at 3.79%.

While the average interest rate for a 15-year fixed-rate mortgage is 3.16%, according to Bankrate’s recent data.

Moreover, from 2020 to 2021, the housing market is rising. Based on data by Statista, there is a significant price increase from last year up to this year. The prices of American homes increased by a total of 17.5%. This is more than twice as compared to a typical year back in 2010. Even more than 30% in states like Idaho, Boise, and Austin, Texas.

The fluctuating state of mortgage interest rates is common. And it can happen due to many reasons – economic growth, inflation, and monetary policy changes. Although some fluctuations are just on their bare minimum, a quarter-point move can be substantial in a couple of weeks.

Interest rates matter significantly as even a difference of 1% can add up to tens of thousands of dollars over the life of a loan. For example, a 30-year fixed-rate mortgage of 3% vs 4% APR (annual percentage rate) on $300,000. You’ll be paying more than $60,000 in the end for the mortgage at a higher rate.

As mortgage rates move up, will the housing market cool off? Housing's share of GDP stood at about 17% in 2021. pic.twitter.com/tBtN9j5t5c

— Kathy Jones (@KathyJones) February 8, 2022

In the last quarter of last year, the housing market has undergone many changes. Nerdwallet home and mortgage expert Holden Lewis says it’s reckless to predict how the prices in the housing market will change. “It’s best not to try to time the market. If you wait on the expectation that prices will fall in a year or two, you might be disappointed.”

Lewis added, “Buy now if you’re sure you’re ready and you can afford a home. It’s a highly personal question without a one-size-fits-all answer.”

The housing market is selling at higher prices at a faster rate.

Hence, buyers don’t have much chance to expand their houses and search other areas. This occurs in most of the states in the US.

Many first-time buyers have the same question in mind. When will the housing market lie low? Is it wise to buy a house now, or is it better to dive in soon or wait? Based on the housing experts’ advice, “It’ll probably calm down a bit this year, but it’ll remain kind of wild.” They said there’s no need to wait that long. But, there’s also no need to rush due to the fluctuating housing market.

The best time to buy a house is when interest rates are low, and there’s no need to go into a bidding war and make a rushed decision. Suppose there’s only a chance to choose the state of the housing market. You can minimize your stress by choosing when prices are low and are sure to rise in the future.

In a nutshell, today’s housing market’s competitive state isn’t the perfect time to buy a house. What’s more, it can be the worst time to buy a house. Although, it’s still impossible to know that magical moment of when to buy. Waiting for the market to settle down won’t help. Brookings Institution senior fellow Jenny Schuetz has some advice. “There’s not going to be an optimal point when prices dip, and you can jump in. What’s more important is whether you are in the financial position to buy a home. If you are, now seems as fine a time as a year from now to do so.”