I have heard so many different variations as to why now is a bad time to buy a home and rebuttals that say now is a good time to buy a home; but who's right?  Well, if you want the brass tax and the cold hard truth; no one knows for sure what the market is going to do.  There is not a predictor for a market like this because we haven't seen a market like this before. Even those who have been in the Real Estate Business for over 45 years cannot predict with any kind of certainty what the future state of the Real Estate Market is going to be in the short term or in the long term. There just isn't a crystal ball or magic 8 ball   answer for the current state of our economic circumstances. I am the furthest thing from an economist but it would appear that with the previous projections we have seen they are in great company with our meteorologists trying to guess the weather in our great state of Arkansas! So, this is the best advice I have heard and read up to this point with regards to our housing market. 

If you are ready to buy a home then you shouldn't let the current market steer you away from home ownership. There are some things that we can control and some things that we can't control. The first thing to do in this housing market is to take control over the things that you can and don't sweat the things that you can't. This is where it becomes a personal decision for YOU and YOUR family. Really ask yourself the tough questions; is it the right time for you to buy a house in YOUR life?  Does buying a home right now make the most sense for you and YOUR budget? That means you may need to make some  adjustments based on needs versus wants. Maybe you don't start out buying your dream home but you stair step your way to your dream home. Maybe it makes sense to wait until you have your debt to income ratio more in line, pay off credit card debt, or payoff an existing auto loan, and wait 6 months to a year.  This increases your buying power! Not right now doesn't mean not ever; but while you are waiting there are certainly some steps you can do to put yourself in a much better position when you are ready. 

Let's look at some things we can do to maximize YOUR buying power while navigating these uncharted waters and really do a self assessment and decide is now the right time for ME to buy a home? 

Buying a home is a commitment; it means you are putting down roots in a specific area and you better make sure that this is an area that you plan on staying for a while in order to recoup your investment and possibly build up equity in your home purchase. Is this a place you can see yourself raising your children; even if you do not yet have any children? Is this going to be a place that I can afford the monthly mortgage or will it be a struggle? Is my job secure enough for me to make this large of a financial commitment? If I waited and worked on building up my credit would it make a huge impact on my interest rate and buying power?  You need to really stop and take inventory of where YOU are at in life.  

"Ideally, you'd want to remain in the home long enough for rising property values and your equity to exceed the costs of buying and selling, including real estate commissions and mortgage closing costs. That will typically take several years." says Barbara Marquand; mortgage blog author/contributor nerdwallet.com

Keep in mind if you sell before two years you could be subject to capital gains taxes. 

Financial Security/Job Security 

A mortgage is a huge financial commitment and it can take its toll on your health and well being if you should suddenly become unemployed for whatever reason. If you are skeptical about your longevity at your current employer or you are worried about a layoff; than it is probably not a good time to buy a home. You will want to wait until your employment situation is a lot more stable before you even think about buying a house. 

Have you prepared financially for Home Ownership? 

3 Main areas to consider: Savings, Credit, and Debt 

  • Savings - You will need to save up enough money for a down payment, closing costs, and any related moving expenses or immediate fixes on the home you buy. What if you have pets and need a fence and the home you are buying is going to need a fenced in backyard? These are all things to consider when looking for your home. Remember, the more you put down the less your monthly mortgage payment will be.  

         The typical down payment for first-time buyers is 6% and for repeat buyers is 17%, according to an NAR survey of home                 buyers who purchased a primary residence from July 2021 through June 2022. We typically see anywhere from 3% to 3.5%           for FHA loans and then there are some loans that are No Money Down loans like the USDA Rural Development Loan.                         Remember, there are also state funded programs to help with down payment assistance based on income eligibility. 

  • Credit- Lenders generally offer the best mortgage rates and terms to borrowers with credit scores of 740 and above, although you can qualify for a mortgage with a score in the 600s. The options are much slimmer and loan costs can be higher for borrowers with a score in the 500s if you can get approved at that level. Remember, banks are tightening up on their lender requirements as well. So, it might make sense to work on your credit if you are not in that top tier as this does help increase your buying power and will assist with getting you a better interest rate. Take this time to concentrate on building your credit and make the most out of any possible delay you may experience within the current market conditions. 

         The average FICO credit score for closed mortgage loans to purchase homes in the past 30 days was 732, according to               mortgage data provider ICE Mortgage Technology.

  • Lenders look at your debt-to-income ratio (DTI) to help determine whether you qualify for a mortgage. Your DTI is the percentage of your monthly gross income that goes toward monthly debt payments, including housing costs, as well as car, student loan, credit card and other debt obligations. Lenders like to see a DTI under 36%, although it's possible to qualify with a higher ratio. The lower your DTI, the better your chances of qualifying for a mortgage and getting offered the lowest available rate.

         The average DTI for purchase mortgages in the past 30 days was 40%, according to ICE Mortgage Technology.


The reason we are talking about this now is because none of the chief economists foresee interest rates going down significantly in the coming months or even years. All of the chief economists I have seen including the NAR giving their predictions say that the rates will not fall below 6% through 2025. Capital Economics expects mortgage rates to stay above 6% through 2025. Mortgage rates hitting a century-high of 8% this last month has left economists, homeowners, and prospective buyers alike wondering when (or whether) the market will let up. 

This is likely going to be the new normal of interest rates and the market is reacting to the new normal. This will take some buyers that have grown accustomed to historically low interest rates time to adjust to this new normal; everyone got spoiled to the low rates and now it is quite the adjustment to the new much more aligned interest rates that we will be seeing for at least the next foreseeable future. Sellers, be prepared for your houses to stay on the market a little longer than previous years. We all knew that the market could not sustain itself on the trajectory of 2020, 2021, and the early part of 2022 before the Feds raised the interest rates to combat inflation. Now, we course correct and come back to some sense of normalcy in our industry. 

"Since March 2022, the Federal Reserve has raised a short-term interest rate 11 times — up a total of 5.25 percentage points — to control inflation. The short-term interest rate the Fed controls also influences mortgage rates. The Fed didn’t raise rates at its most recent meeting, ending on Sept. 20. For home buyers, that’s better news than another increase, but it doesn’t provide the same relief as a rate cut might.

Higher rates shrink buying power because they make home loans more expensive. For example, the monthly payment for a $350,000 house with a 20% down payment would be $1,679 with a 6% mortgage rate on a 30-year mortgage, not including home insurance and property taxes. With a 7.5% rate, the monthly payment would be $1,958 — $279 higher." [https://www.nerdwallet.com/article/mortgages/is-it-a-good-time-to-buy-a-house]

These are the things that you CAN control:

  • Shop around for the best deal. Especially given today's higher rates, buyers can save $600 to $1,200 per year by applying for loans from multiple mortgage lenders, according to a February 2023 study by Freddie Mac, the government-sponsored entity that buys conforming loans from mortgage lenders.

  • Make sure you can afford the monthly mortgage payment. A home affordability calculator can help you crunch the numbers.

  • After getting approved for a home loan, consider locking in the mortgage rate until the loan closes to protect against further rate increases. Remember to ask about buying down interest points and you can ask your agent to work with your lender to craft an offer that could not only save your monthly payment but also help the seller net more proceeds. This is why we always say to work with your real estate agent as they have forged relationships with lenders, banks, mortgage brokers, and they can help get you with the right person for your specific needs as we know that the mortgage business is not a one size fits all and everyone's circumstances are different and may require special lending requirements. Leave it to the professionals and if you don't understand; don't be afraid to ask questions. Here at Adkins & Associates Real Estate we don't want to be your Realtor for just one time; we want to be your trusted Realtors for a lifetime and that is every single one of our agents mission when we represent you in a Real Estate Transaction rather it be for buying, selling, or investing. 

    The truth is we can't advise you on when is the best time to buy or sell your home; we can only caution you about trends or things we are seeing in real time; but what we can do is lend our expertise and be with you every step of the way and show you every advantage and disadvantage in the current real estate climate and guide you on your path like a trusted friend. No matter the circumstance we will make sure you know every option available to you. So, is now a good time to buy? Well, that really depends on YOUR specific situation; if you are ready to buy or sell a home in Central Arkansas give us a call today! 


    JL Owens, Author

    TC, Marketing/Social Media

    Adkins & Associates Real Estate








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