I’ve heard it time and time again.
“We want to buy, but we just need a little time to save,” or “In a year, we’ll have more saved. We’ll get serious then.”
At first glance, these strategies seem sound. Of course you want to have more money to work with when buying a house. I would never suggest making a decision you are not financially ready to make, and sometimes waiting is the right call, depending on the circumstances, financial or otherwise.
However; hear me out.
[one-half-first]In today’s fast paced market, it’s usually advantageous to act fast. I recently explained why inventory is so low, and why that probably won’t change anytime soon. The market is flooded with eager buyers all vying for a small pool of homes. And for anyone who remembers their Economics 101, when supply is low and demand is high, prices rise.
At least in the short term, the likelihood of this inventory issue resolving itself is low. Home starts are nowhere near early 2000’s levels, especially in the the urban areas. The only real threat to these high prices is a spike in interest rates (not out of the question, but we would need to see 2-3 points of increase to really dampen demand) or a pricing spike so high that affordability becomes an issue.
And even if these conditions occur, it’s likely that prices will only slow their climb, rather than stall or drop.
So what to do?
Pricing is high, but the price of waiting is higher. The median price for a sold home in 2012 was $185,000. In 2017, it was $233,000 — and that’s for all of MLS. When you look at some of the sub-markets in Richmond, the numbers are even more extreme. So what if you had purchased back in 2014? What about 2012? A 26% increase in home values is not a small matter.
Rates remain low and prices are accelerating. While I don’t want to be the Realtor that screams BUY NOW! regardless of market conditions (like many do), I am of the strong opinion that time is not your ally in this particular market structure. The pricing run is not done and everyday you wait costs you money.
Do your homework, get your finances in order, and don’t wait to save $10,000 when prices will go up $15,000.