This is one of the top questions I’m getting right now. And the answer isn’t that simple. Watch the video for my answer.
Millions of people are hoping for a housing market crash to happen so house prices can go down. There isn’t much opportunity for many home buyers and house prices are becoming unaffordable. Many home buyers are frustrated and I totally get it! Sadly I don’t have a crystal ball, but we can look at a few key things.
Reasons to Buy a Home
- Investment…yes, of course, owning your home is the best investment you can make. If you buy a home now and it goes up another 5% you are going to have a great investment. But this is not the only reason to buy a home.
You have to live somewhere…and if you are thinking of moving think about where and why you want to live there…
Let’s walk through a few things that I hope will help you decide if now is the right time for you to buy a home. To buy a home you need some kind of starting investment, some money to put down, this will get you to a certain monthly payment…if you put down 3.5% down you will have a higher monthly payment, vs if you put down 20%..you also need this to to rent a home and that’s getting crazy- but it is usually a lot less and you obviously need good credit and income, we are going on the assumption you have that..other wise you can check out my video –
How to improve your credit to buy a house HERE
So the starting point is really looking at home prices on your favorite website- I like Zillow still – and playing around with the mortgage calculator – i’ll put a link to one below – and see what your payments will be like if you put down 3.5% vs higher and what price points. Let’s use a house that’s $650,000 and you put 3.5% down (the lowest you can)- and you are buying this home in San Diego. Your monthly cost will be around $4,000 a month…this includes property tax, insurance, principal, interest and mortgage insurance- which we can avoid if we put more money down. And this is also assuming a mortgage rate of 3%
If we look at the housing predictions of the experts like the National Association of Realtors, Realtor.com and Fannie and Freddie Mac (not other youtubers) they are predicting continuing price increases up to 6% over the next
Year. So that house that is $650,000 now, if it goes up 6%, that’s another 39,000 which makes that house 689,000. Now your payment is up to 4267 and if the rates go up to 3.3% it will go up to 4373…that is not a huge difference month over month, but annually its a 4,476 difference…that’s a lot!
If you do not have the down payment…start looking at budgeting and reach out to me to get a plan in place.
Rent VS. Buy
Now should you rent our should you buy…go look for the house to rent—you will be surprised at how expensive rent is, especially San Diego. In most states your rent can be higher or just as high—
So now you have a rough idea of the costs to buy vs rent…and one looks better to you most likely. Now it’s time to lay out pros and cons
Let’s lay them out…
- Buying a house- it’s an investment…can you hold onto it? Maintain it?
- Pro- your home to do what you want with- a house is a home- almost always a great investment, even fi the market crashes it will bounce back
Renting pros and cons
It’s not yours, you will not see any of that money, it’s like lighting it on fire.
It’s cheaper to get started
You can be asked to leave anytime, not very secure
There is nothing wrong with renting!
All of this is a very personal choice…i’m here if you want to run through the different scenarios together, my contact info is below.
What happens if mortgage rates rise? How does that affect your monthly payment?
Monthly Mortgage Payment Up $203 from One Year Ago, Outpacing Wage Gains With home prices up 17.8% from one year ago, the estimated monthly mortgage payment on a 10% down payment 30-year mortgage for a typical home rose to $1,378, up $203/month from one year ago. Mortgage payments have outpaced the rise in wages since April 2021. As of July, the monthly wage rose $175 from one year ago while the monthly mortgage on a typical home ($359,900) financed with a 10% down payment 30-year fixed rate mortgage was up $175 from one year ago. The 30-year fixed mortgage rate stayed at 2.87% during the week of September 3. NAR Chief Economist Lawrence Yun expects the 30-year fixed mortgage rate to increase to 3.3% by the 4th quarter of 2021 and to average 3.6% in 2022 with inflation hitting 5.4% in June and July. Mortgage rates have stayed low on concerns about the economic impact of rising Delta variant transmission, with 97% of counties having substantial to high transmission.
I help lots of people who find me on youtube and my website buy homes in San Diego. I’m happy to help you too, just call or text me at 760-310-0166