Do you think it is a good market to buy?

Question

What are your thoughts on buying a primary residence?  I plan to live in it and rent out my old place. it needs some cosmetic work and not a bad deal. i am in south central texas near san antonio.

Cody Smith · Answer

Hey @Rani Shukla! Great question. This is the same thing people are asking themselves all around the country! I think the decision to buy shouldn't necessarily be based solely upon the market conditions, but rather your personal ability to buy what works best for you.

Obviously this is not the same market we saw 6 or 12 months ago. Things have changed rapidly and housing has become less affordable than it was before. Buyers need to keep in mind, however, that things will continue to change and always have. According to many real estate professionals, now is the best time to buy this year. The Fed has plans to continue to increase interest rates for the foreseeable future, so things may get even less affordable as time goes on.

That being said, just as rates are going up, they may eventually come back down! We may never see the 2-3% interest we have before, but they will continue to change throughout the course of time. This becomes a problem when people decide to "wait and see" or "hold off until rates come back down". What if they never do? What if today's rates are the new normal? I would rather purchase a home now that I can afford than wait and potentially afford less in the future.

What if rates do go back down and you're stuck with a "high" interest rate from purchasing today? You can refinance! Even if they go down significantly, you have the option to remedy that higher interest rate by refinancing.

In addition to rates, we are projected to see upwards of 20% appreciation over the next 3 years in the housing market. 6-9% over the rest of 2022, 4-6% in 2023 and 3-4% in 2024. As we continue to have shortages in supply, we should continue to see the demand that supports that appreciation.

Moving out and renting the previous home is exactly how I got my first rental property. It is a great strategy to get started as long as your current home will perform well as a rental.

Considerations before making your decision: Can you afford the home you want as your new primary residence? Will you have enough cash in reserves after the purchase to support your new rental property? Does your current house make sense as a rental? Do you have a back up plan for the property if the rental doesn't work out? How much potential profit will you lose out on between appreciation and cash flow if you decided to wait?

There's never a perfect time to buy. If all my answers to these questions made sense, then I would do it! With the right research and plans, the market doesn't necessarily matter. Waiting for the right time could be the thing that hurts you the most!

William Joel Idleman · Answer

^^^ Everything he said.  I buy when I'm ready to buy.  I don't let interest rates stop me.  I don't let a cooling market stop me.  I figure out how to position myself to win in every condition.  The market conditions definitely affect how much I can buy, where I buy and what type of property I buy, but when I'm ready I move forward.  If you ask any financial advisor, "When is the best time to buy a stock or invest in an asset?"  A good advisor will answer, "Today."  Investing isn't about TIMING the market.  It's about TIME IN the market.  If you're ready to buy in these conditions, then move forward with confidence and leave the fear behind you.

Lucia Rushton · Answer

@Rani Shukla. To answer your question, prices wil continue to appreciate in Texas, the expectation is 10% overall, down for the 20% from last year. And with mortgage rates increasing, a house next year will be more expensive overall than a house today. Price + mortgage= less potential for cash flow in the short term. And it depends on your financial strength as well. As always my two cents. Best wishes

Robert Finn · Answer

Seller's are having more discussions and flexibility now when it comes to negotiation. Working into the deal a point buy down, closing credits, etc. to sweeten the deal and reduce your overhead. Ask lender's rate and terms on FHA loans/ other primary home loans to house hack multifamily. Date the rate marry the house :)

Wale Lawal · Answer

@Rani Shukla

A
local Investor-Agent can help shorten your learning curve and save
you a lot of headaches as they tend to understand the market better.

Use
Rentometer.com or BP Insight to have an idea of what the property
will rent for.

If
you don’t have access to either, then use 90% of whatever Zillow
Rent Estimate is.

For example, if Zillow says it will rent for $2000,
then 0.9 x $2000 = $1800 will be the most likely rent.

That
been said, the best comparable is the one you get from an Agent
because they have MLS access with a lot of data that will provide you
the best result.

Good luck!

Patrick Drury · Answer

@Rani ShuklaExactly as @William Joel Idleman stated above. The people that are waiting to time the market for another 2008 will be waiting forever. If the deal makes sense, go for it.

Theresa Harris · Answer

run the numbers on your current home to see what it would look like as a rental. Also evaluate the costs of buying a new property for you vs staying in the current home.

Do you think it is a good market to buy?

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