Even if you haven’t paid much attention to news headlines, you probably have some inkling that the housing market has been notoriously challenging in 2023. And if you’re thinking about buying a home now and wondering if it’s a good time, it could help to consider the opinion of someone who knows the real estate market.
In a YouTube video posted earlier this year, real estate expert Graham Stephan explained why this might not be the best year to buy a home.
Reasons You Shouldn’t Buy a Home Right Now
Certain conditions make this market especially difficult for buyers.
High Interest Rates
Mortgage rates hit a high of 7.49% in October, according to Freddie Mac — a good reason to hold off on buying.
“Interest rates have risen at their fastest pace in history, and we currently have around the same numbers we saw back in the early-to-mid 2000s,” Stephan said. “Except unlike 20 years ago, median home prices are no longer $187,000 … and you can bet median incomes have not gone up enough to keep up.”
Inflation has moderated — the all-items consumer price index rose 3.2% in September, which is down significantly from the 9.1% peak in June 2022. However, the cumulative effects have created barriers for homebuyers.
“If you would normally have $2,000 left over every single month after expenses, higher prices might mean that you only $1,500, meaning there’s less disposable income and less money that can be spent toward housing,” Stefan said.
Unemployment remains relatively low at 3.9%, according to the U.S. Bureau of Labor Statistics. However, tech companies have already laid off thousands of workers, and other companies are following suit. According to the latest Forbes 2023 Layoff Tracker, Advance Auto Parts, Chewy, Pfizer, Panera and Charles Schwab are just a few of the companies planning significant workforce reductions.
While layoffs reduce demand for housing, which can help reduce prices, the possibility that you might get laid off is a good reason to put off a home purchase.
Reasons Not To Wait
The news isn’t all doom and gloom. For some buyers, this could be the right time to purchase a home.
Prices Are Expected To Increase
While Stefan predicted early this year that home prices would fall, the National Association of Realtors and Freddie Mac both predict further increases. In fact, Lawrence Yun, NAR’s chief economist, wrote in a Nov. 15 blog post that he believes mortgage rates have already peaked and that home prices will rise another 15% over the coming year.
Jobs Are Still Plentiful
Not everyone needs to be worried about losing their job. Despite layoffs, the national unemployment rate, currently at 3.9%, has remained nearly unchanged over the last year. And in some states, it’s much lower.
Maryland, for example, has a jobless rate of just 1.7%. Twenty-six states overall have unemployment rates lower than the national average.
If You Buy, Buy Wisely
“Accurately predicting anything is really a shot in the dark,” Stefan said. “That’s why it’s always best to only buy what you can afford, with a fixed-rated mortgage that you intend on keeping for at least seven to 10 years.”
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