What’s a potential homebuyer to do?

By WTR Blog

Homebuyers have stepped away from the market in droves because of both rising interest rates and discouragement over the amount of competition they were facing in the market.

So when is the right time to buy a home?  In Washington, DC area, the most difficult market to purchase in is the highly competitive spring market.  Here are two buying options and what can generally be expected while buying in each:

BUY NOW IN THE FALL MARKET

The best that can happen: Because of less competition, the buyer gets a great home for a cheaper price than if they bought in the spring market. Future home prices continue to rise, though probably not at the same rate. Interest rates fall and the homebuyer refinances to the new, lower rate.

The worst that can happen: The buyer gets a great home for a cheaper price than if they bought in the spring market. Home prices stagnate or have a one-year slump before returning to the  original purchase price a year later, like during the Great Recession. Interest rates stay the same or rise meaning the home buyer has made a good choice locking in the current rate.

BUY IN NEXT YEAR’S SPRING MARKET

The best that can happen: The buyer gets a great home for a higher price than if they had bought in the fall market. Home prices continue to rise, but the home buyer has bought at the height of the market. Interest rates are lower than they were in the fall so the homebuyer locks in an initial lower rate.

The worst that can happen:

Because of the historically competitive spring market, the buyer gets a good home for a higher price than if they had bought in the fall market. Home prices continue to rise, but the home buyer has bought a lesser home at the height of the market. Interest rates are higher than they were in the fall, and all the homebuyer can do is look back and cry.

Every market has ups and downs in home prices. The DC area has been a bit different because the presence of the federal government provides a bit of a floor under home prices.  Our lows are not quite so bad or last very long.  Our highs tend to be higher because of the government, and more recently, tens of thousands of tech jobs coming to the area. There really isn’t a bad time to buy, but some times are better than others.  Like now.