As we move through the second half of 2024, the housing market has experienced notable changes, leading many people to ask “Should I buy a house now? Or should I wait?” Mortgage rates have recently dropped to their lowest since April 2023, but home prices remain high, and future rate trends are still influenced by Federal Reserve policies. Before deciding to buy a home, whether in Trenton, NJ, or Bridgeport, CT, it’s important to evaluate your financial stability, job security, credit score, and down payment savings. Read on to figure out whether you should buy a house now or wait.
What is the housing market like in 2024?
Before deciding if now’s the time to buy (or not) let’s break down some recent macroeconomic changes and what they mean for buyers.
Mortgage rates
As of late, mortgage rates have dropped. On August 5th, the daily average for 30-year fixed mortgage rates fell to 6.43%, the lowest level since April 2023. Although home prices have also declined, future mortgage rates will still be shaped by the Federal Reserve’s policies. Investors expect rates to decrease gradually, but significant drops beyond current levels are unlikely. With inflation being a key factor behind the high rates, potential economic changes may lower rates further. It’s crucial to carefully consider whether to lock in a rate now or wait.
Home inventory and affordability
While mortgage rates have dropped recently, many buyers remain cautious. Some are holding off, expecting mortgage rates to fall further after the Federal Reserve’s anticipated rate cuts, while others await clarity on the new National Association of Realtors (NAR) rules or the outcome of the upcoming presidential election.
Despite these uncertainties, home inventory is showing signs of improvement, with new listings up 3.7% year-over-year and overall listings rising 16.6%. This expanding inventory, spurred by lower mortgage rates, offers buyers more choices, even though pending sales have dropped by 8.4% over the past year.
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Questions to ask yourself before you buy a house or wait
Before you figure out whether purchasing a house is right for you, be sure to ask yourself these five questions.
1. Do you currently have debt?
When applying for a home loan, lenders assess your debt-to-income ratio (DTI), which represents the portion of your gross monthly income used to pay off debts. This ratio helps lenders determine how much you can borrow by considering the total percentage of your income allocated to monthly debt payments.
2. Are you ready to set down roots?
Consider whether you plan to stay in the city where you’re thinking of buying a home for the long term. In some areas, renting might make more financial sense than buying. Weigh your personal goals and the financial implications of renting versus buying based on your long-term plans.
3. Do you have job security?
A mortgage is a significant financial commitment, and job loss can create a lot of added pressure. If there’s a chance of being laid off, it might be wise to delay purchasing a home.
4. Do you have good credit?
Lenders tend to offer more favorable mortgage rates to individuals with credit scores of 750 or higher, though it’s possible to qualify with a lower score. If your credit score is on the lower side, it might be wise to delay purchasing a home until it improves.
5. Do you have enough money saved for a down payment?
Having sufficient savings for a down payment is crucial before buying a home. In most cases, it’s recommended to have around 20% of the purchase price set aside, though this can vary.
Should I buy a house now or wait: conclusion
In summary, the 2024 housing market presents a mix of opportunity and uncertainty. With mortgage rates at their lowest in months and an increase in home inventory, buyers have more choices than in recent years. However, factors such as potential future rate cuts, regulatory changes, and political events add complexity to the decision-making process.
To make an informed choice, prospective buyers should carefully assess their financial readiness, long-term plans, and market conditions. Whether you choose to act now or wait, staying informed and considering your personal circumstances will be key to navigating the evolving real estate landscape.
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Ryan Castillo is a Marketing Manager and has been working at Redfin for the last four years. He is based in New York City and enjoys attending broadway shows, playing pickleball, and collecting vinyl records. His dream home would be a large cape cod-style house by the beach.
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