Is Now a Good Time to Buy a House? Let’s Talk About It

Is there ever a really good time to buy a house? Yes, but even when conditions are less than ideal, you still have buying power.

It’s completely understandable to want to wait until you have favorable conditions—buyer’s market, money saved up, low interest rates—before you purchase a home. But you have to be prepared for the instance that circumstances may never be ideal. And, that’s okay. There are still plenty of opportunities out there for you. But is right now a good time to buy?

We’ve compiled a list of factors to keep in mind if you’re considering buying a house today.

Mortgage Rates

Between 2022 and 2023, the Federal Reserve raised the federal interest rate 5.25% to combat inflation. That rate increase significantly affected mortgage rates, increasing them to highs not seen in many years.

In September 2024, the Fed decreased the rate for the first time in three years. That brought down interest rates, but not enough to have a major impact. As of October 2024, mortgage rates are still elevated, at around 6%. That means higher monthly payments, which may put some people out of the running. The good news is more interest rate cuts are coming.

Evaluate Your Credit

Your credit is the single most important factor when it comes to your ability to buy a home. It’s the first thing prospective lenders will look at when considering you for a mortgage.

The better your credit score, the better your mortgage rate. If you haven’t already, now is the time to pay down other debts (they will be held against you) and run your report to ensure there are no errors on it.

Let’s Talk Down Payments

The standard down payment on a home is around 8% to 10%. But keep in mind, that the more you pay upfront, the lower your monthly payment. It’s also good to have money in reserve. It’ll paint you in a good light with creditors.

Yes, there are programs with lower down payment requirements, but they often come with many stipulations. It’s best to not get caught up in them unless it’s your only option. Most people can work on their credit for a year or two and boost their scores enough to qualify with a lower down payment.

Long-Term Living

Another thing to consider is your living situation. How long do you plan to live in your home after you buy it? If you have wanderlust and like to move every few years, you might want to wait until you’re ready to settle down.

Buying a home comes with several expenses, all of which will be for naught if you’re simply planning to move again in the near future.

Real Estate Market in Your Area

Here’s the thing. Broad real estate market trends don’t necessarily apply to your region. It’s broad for a reason. You need to dial down into what the market is like in the area you plan to buy.

For example, what is the average home price, and are values in your region rising or dropping? Even if national home prices are on an upward trend, that might not be true where you are. If you see a decline in prices and an uptick in inventory, you’ll have more buying power and that’s worth jumping on the real estate wagon for.

Possibility of a Recession

The possibility of a recession has been looming over us for quite some time. While the risk has gone down, we’re not entirely out of the water.

However, that should not stop you from buying a home if the conditions are right for you. Just make sure your ducks are lined up in a row, free of squirrels, and you have a contingency plan. But honestly? You should have this anyway.

Financial Readiness

Here’s another point to consider: your financial readiness. Buying a home means more than just paying a mortgage. You are now responsible for everything in your home and that might not be a good thing at this point in your life.

For instance, if your appliances break do you have the money to replace them? There’s no landlord to call on in case of an emergency. You are the landlord. Financial readiness with a home means you have an emergency fund for instances like this, or in the event that you lose your job.

Borrowing Power

Everyone has a different level of borrowing power and it correlates to their income. If you’re not sure what yours is, speak with a lender to start the pre-qualification process. They can give you a ballpark figure.

Then, you can take this number and look at the homes around you. What does that money buy you? Is it enough? Does it fit your goals for a home? If not, this is when you start making money moves such as a side gig or changing jobs to boost your borrowing power. Whatever you do, don’t settle. You won’t be happy if you do.