Should You Buy Now or Wait?

Why it’s not the best idea to wait if you want to buy a home. 

Should you buy now, or is it better to wait? I’m joined by Jason Fallon from Movement Mortgage to discuss what buyers should consider when deciding if it's the right time to buy.

What are the key factors in today’s market?

I think there are three key factors that buyers should consider in today’s market: the future of home prices, the interest rate market, and potential tax benefits. All three of these areas should be seriously considered.

Will prices decrease?

I’m starting to get this question more and more, but the data I’m receiving indicates the opposite. Property values won’t go down; they’ll increase at a decent rate that’s more in line with a typical market. The longer you wait, the higher the home prices will be.

How does appreciation affect to cost of waiting to buy?

I rely on Barry Habib, one of the great pundits about what’s going on in this market, and he’s saying that property values should go up almost 3% in the next three months in the Philidelphia area. Over the next 12 months, it should be a bit over 5%; in two years, it should be 9%; and in three years, we should have over 12.5% appreciation.

In Barry’s mind, there won’t be any kind of decline in three years. If you wait, it will cost you a lot of money. The only thing that’s coming down is the rate of appreciation.

 "If you wait, it will cost you a lot of money."

How will interest rates affect buyers’ costs?

I think interest rates will affect buyers the most. Rates have been on the rise for the last four months because of our 40-year high inflation. The Federal Reserve has a lot of tools to fight this, but unfortunately, one of them is to raise interest rates. That doesn’t directly affect mortgage rates, but they are running parallel at the moment. Even if the speed of rate increases levels off, we’ll still see large increases in monthly payments in the future.

Can you give an example of the costs of waiting?

On a $300,000 home, you would lose about $9,000 in appreciation if you waited six months. Over a year, it would cost you $16,000 in lost appreciation. Over two years, you’d lose $26,000 of appreciation, and you’d lose $38,000 over three years.

What else should buyers consider?

The mortgage interest deduction is one of the few things that haven’t been written out of the tax code yet. It could affect your tax return by thousands of dollars. It could lower your realized income or decrease your tax liability.

If you have any questions for Jason or want to get pre-approved, call him at (215) 327-2217 or email him at [email protected]. If you have any other real estate questions, feel free to call or email me as well. I would love to hear from you.

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