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!
