Is this a good time to purchase a home?

No kids, single? How sure are you that you want to / are likely to settle down in a single place for the next 5-10 years? Life can change a lot in that span.

With closing costs/agent's fees, it's probable you'd be under on a quick re-sale, which could be triggered by a change in your job/relationship/kid status. If you feel confident in being stable for the next 5+ years go for it, you can re-finance if mortgage rates go down significantly.

Housing prices historically don't go down, or tread water for very long. The 08 crisis had a 2 year crash, followed by a 2 year tread, and then back to growth. There was a peak in the 2022 covid crisis, and there's been a year downswing recorded so far, over the next few years it may continue going down/tread water a bit, but again if the plan isn't to flip the house in 2 years, the odds are in 5-10 years from now housing will have appreciated well from today. Focusing on finding a house that is right for you might be better than trying to time the market perfectly.

Outside of that, If you take home about 6.25k a month with 1k in non-housing related bills, a 300k mortgage, with utilities/hoa/taxes could cost you 3-3.5k a month, leaving you with around 2-1.5k left for your discretion. Thats ultimately a math question for what you're comfortable with for saving/lifestyle spending, going cheaper for additional breathing room, if there are cheaper options that you would still be content with is always good to consider.

 

Rates will go down. Wait.

 

Its a good idea to buy a home if you can financially afford it, age does not matter... Properties are investments period. There are many ways to go about it as well, looks like you have a conventional loan in place. Conventional loans are great, lower monthly payments but I think you are still within FHA reach. FHA's only require a 3.4 ish down payment which saves you a little more cash for emergency purposes but on a higher monthly since its insured.

On interest, the market is somewhat slow right now due to interest. You can make lower offers on nicer homes since there aren't tons of people competing for the same home. When interest rates come down the market will pick up and so will the buyers trying to get the home you like which may raise the price you want. You can always refinance later at a better rate.

Fear, alot of people have fear of buying homes because they think something might come up that could potentially cause them to lose their investment. What's there to fear? there are many ways out. If you hold on to the property for at least 3-5 years you should have enough equity to sell and make your money back and if the market continues trending the way it has maybe even more. Lets say something happens in 2 years? Rent the home so that the tenants are paying off mortgage while you move to a condo/apartment. Most banks also offer loan modifications in the event that paying your mortgage becomes a burden.

 

I would say, no.

But that's very easy for me to say because my house is worth nearly twice what it was when I bought it 5 years ago (per HCAD; who knows what it would actually sell for). And I locked in a 2.5% interest rate during covid. So I'm here until the kids are moved out.

I would add to your calculations that home ownership has more costs than you're likely anticipating. Maintaining the lawn (mowing + fertilizer, etc.), maintaining the exterior, updating some of the interior, repairs, etc. Our water bills are also MUCH higher than when we rented (we have a MUD and a WCID; pay like $200/mo for water). HOA costs. And obviously end of year taxes, ours are about $11K iirc.

Your situation is obviously different. (I also have 3 kids with insane daycare and extracurricular activity cost.) I don't know what the rates are now but I assume they're 5-6%. Property values haven't really come down. So from the point of view of those two data points only, it's a bad time to buy. But you have more relevant data points than just those two.

I have no good insight into the future of the Houston housing market. So while I think it's a bad time to buy, I can't say with any certainty that it will be better in the next 2-3 years.

In conclusion, I have nothing valuable to add, but have put down some text.

 

If I can I buy as long as price is not crazy, interest rate is fair, and property is in good condition. My 3 bed, 2 bath house mortgage with everything included (insurance, taxes, etc.) is less than 1k per month. Tell me, what can you rent for 1k nowadays? I bought 22 years ago and once I pay it off it will be even cheaper, that's not counting the fact that if I sell it I can easily do it for more than double my original note.

 

Relative to the past 10 years, yes, it's a buyer's market. Higher interest rates and the 'feeding frenzy' of home purchasing by Millennials have led to a tapering of demand and a 'just wait for lower interest rates!' mentality like @DonnyMost means that there is more inventory than there was in a long time which pushes prices down.

https://www.businessinsider.com/hou...age-rates-real-estate-agent-home-sales-2024-2

Is it an optimal time to buy? To get deals, yes. Interest rates, no. You can still get low 6% right now if your DTI is low, credit is high, job history is good, etc. You may have to pay a little to get a point. But rates will fall, but you won't see anything below 5% for 2-3 years. In the meantime, property prices will keep creeping up.

Also want to add that summer is the hot market for real estate. So if you're really looking to get a good deal, winter is the time.

One other factor is that I expect Boomers to finally start selling their larger 'family' homes in earnest in mass in the next few years (they call this the Silver Tsunami) so they can retire, consolidate finances or move into assisted living homes. This will saturate the market with even more inventory. And some of these houses are going to need serious updating so there will be some awesome deals.

 

This. Prices have fallen from the peak but limited inventory continue to artificially keep prices high. Rates should fall at least by year end and then we will see if that causes prices to rise. Don’t buy now wait.

Affordability wise this is the worst time to buy a house maybe ever?

I bought in 2020 (thankfully) at 3.1% for $303k that is worth $425k or so now. I’d love to move up but you don’t get much for your money anymore. Plus I’d be doubling my interest rate. I’d gladly take my home being worth what I paid if houses I’d like to buy were at 2020 prices too.

 

If you are making 7 million a year, I don't think you should worry about a 380k home.,

 

To put it in perspective -
2018, I bought a house when I thought prices were high and everyone was telling me home prices would go down and wait.
I bought a house about 30% higher than my target price. I was trying to be cheap and economical. It was poor judgement that luckily didn't pan out.
I also purchased at peak interest rate which was 5.25%
I was paying over 50% more to own than to rent.
I refinanced twice over the next 3 years and was able to drop my mortgage payment 25%. This was due to lower interest rate and dropping PMI.
Over the course of three years between rent increases and strategic refi's, I was about break even between the going rent price (2021) and my current mortgage.
I now have about 40% equity in the house and my monthly payment has gone up about 5% due to insurance and taxes.(which equates to about 1% YoY)

Now for your case:
Don't buy if you do not think you will live there for the next 5 years. Don't buy if you are going to have anxiety and be fearful if you need to cut back or get a second income if things get bad.
If you do buy, aim for 5% down, not 20%. Keep that 15% in some type of investment vehicle that can be easily liquidated. If you can keep 50k in your pocket earning 5% interest, that will yield you more than enough to cover PMI. Yes, you will have a slightly higher mortgage, but you wont have your savings locked up and risk losing it if you have to let the house go.
Wait for the interest rates to come down. They will come back down. The house price should be higher (should is the keyword) and you can refi and drop the PMI. Don't cash out unless you have a good investment plan. And dont buy points! You will refi later. (the whole point system is a scam).
Buy a good house. New roof. new AC. good builder. Don't buy cheap and get stuck in the forever maintenance cycle just to save 50k.

If you wait, house prices are going to go up if rates drops. Let me reiterate ... dont buy a crappy house and dont buy a high maintenance house. (big yard, pool, 2 story, high HOA fees, ect ...). This is your starter home. Build up equity then move up to something nicer.

 

It’s been a bad time to buy homes with a correction around the corner for every year since 2012. The last time it was a good time to buy a home was 2009-10 when it did crash and bottomed out but money was scarce and the economy was wrecked because the housing market crashed.

If you need to buy a house, buy it. If rates halve, refinance. Weren’t rates almost 20% during Volker’s time at the fed? Rates today are similar to the rates pre Great Recession than they were the decade following.

It sucks that rates are higher but home prices didn’t come down.

 

Mortgage is also the minimum payment you’ll have to pay each month while rent is the most. Houses have anticipated but expensive costs like roof repairs and appliance replacements.

 

You definitely don't need 20% down. Let's pray.

 

You can always refinance.

DD

 

This is pretty good advice.

Let me add in that you can buy a house that needs 'big' roof, HVAC, foundation repairs, etc, but you get those costs covered by the seller. During your option period (you've already agreed on a price) you get contractors in to give you estimates on EVERYTHING that needs to be repaired. Then you go back to the seller and negotiate either a drop in price or seller contribution. Note that with 5% down you can only get 3% seller contribution (which sucks), so if there are big repairs, it's better to negotiate another reduction in price. You have ammo to negotiate. Use it.

 

Buy when you want a house and when you have the funds to do so. No one can guess what the market will do. Rates may go down, but you can always refinance for relatively cheap. I don't think prices will be going down, but that's only a guess because they hardly ever do.

 

I am single and bought a house 3 years ago at 2.75% as an investment + low interest rates. I love the house but it's too big for one person, but I knew that going in, it's a 2 story 3bd 2.5 bath. I did several upgrades and love the area (Champions) BUT my HOA fee has increased every year and just went up to $385 a month and when I bought it the fees were $265 so I am probably going to look to sell this spring. Rent at apartments suck but at least I would save..............HOA fees suck, we have a pool and a lake and nice amenities, but our subdivision is very small and I dont get $385 worth of enjoyment each month.

 

Is it a town home? I only see monthly maintenance fee's on condo style homes with no backyard in gated communities. HOA's should be yearly.

 

Yowch, $4600 a year for HOA? I hope you have a bell to ring for handjobs on demand. Wtf are they paying for? Does the board pull a salary?

I wouldn't sell. Rent it out and buy another house. Or buy something else. Rent is a black hole.

 

Price trends have gone down ONCE, ever, and that was during the subprime crisis. I'm not talking about a few percentage points due to market demands. Trends almost always go up. With the housing shortage, the risk of them falling again in the next few decades is almost nil.