Is Now the Right Time to Purchase a Home, or Should You Wait Until 2024?

Prospective homebuyers are grappling with a critical decision in today's housing market: buy now or wait until 2024? The Chicago housing market has seen a significant surge in home prices during the pandemic, while efforts by the Federal Reserve to curb inflation have led to a corresponding increase in mortgage rates. If you are a first time home buyer or new to the Chicago area, download “The Definitive Chicago Home-Buying Guide.”

This combination has led many potential buyers to lean toward the "wait" side of the equation. In early September, the Fannie Mae Home Purchase Sentiment Index indicated that more than 80 percent of consumers believe it's not an ideal time to buy a house.  Buyers that “wait” for more ideal conditions may end up paying more, if interest rates decrease (but demand increases), since there may be more competition for the same properties (Seizing the Moment: Why Bold Buyers Can Thrive in this Market).

However, recent developments offer a glimmer of hope for buyers in various parts of the country. Days-on-market figures have increased, giving buyers more time to make informed decisions. Some popular West Coast cities like Seattle and San Francisco have experienced double-digit year-over-year price declines. So, the big question is, should you buy a home now or wait on the sidelines, hoping for a significant drop in prices or rates? What if there's a recession on the horizon? Here are some key considerations to help you decide.

Consumer Attitudes Towards Home Buying

Is Buying a Home the Right Decision?

Mortgage rates are currently high, reaching levels not seen in more than 22 years as of early September. Home prices are also on the rise, increasing for five consecutive months, according to the Case-Shiller U.S. National Home Price NSA Index. Given these factors, it's understandable that you might be hesitant to buy at this time.

Regardless of the market's current status, buying now allows you to start building equity immediately and potentially avoid further mortgage rate increases. Rising rates can strain your monthly budget and result in higher interest payments over the life of the loan.

In general, now may be the right time to buy a home if you can answer "yes" to these three questions:

• Do you have excellent credit?

• Have you saved enough for a down payment?

• Are you planning to stay in the home for a while?

• Are you looking for a single family home or a condo?

Should I Buy a House or Wait Until 2024? The decision of whether to buy a home now or wait ultimately depends on your unique circumstances and preferences. If you're eager to become a homeowner, meet the criteria mentioned above, and are financially stable, you might consider starting your house-hunting journey.

However, if you're holding out for lower mortgage rates, a bit of patience might be prudent. Mortgage rates have been fluctuating lately, and even a small change can significantly impact how much house you can afford over the long term. It's important to analyze your local housing market carefully, as real estate conditions can vary widely from one location to another, even within the same state. Finding a knowledgeable local real estate agent who understands your specific area can be invaluable in navigating the market's unique characteristics.

Home Price Growth

3 Reasons to Buy a Home NOW and Not Wait Until 2024

The decision to buy a home is a significant milestone, one that comes with careful consideration and planning. While some may be tempted to wait for the perfect moment, there are compelling reasons to consider making your move sooner rather than later. Here are five compelling reasons to buy a home now and not wait until 2024.

1. Building Equity:

Homeownership is not just about having a place to live; it's also a long-term investment. The sooner you buy a home, the sooner you start building equity. This equity can be used for various purposes, such as home improvements, paying for education, or even as a financial safety net.

2. Rising Home Prices:

Home prices have been steadily increasing, and this trend is likely to continue. Waiting until 2024 to buy a home may mean paying more for the same property. The appreciation in home values is a compelling reason to act now, as it can help you secure a more valuable asset.  If the prices continue to rise, you could find yourself competing with more home buyers for the same properties.  

3. Personalization and Stability:

Owning a home provides you with the freedom to personalize your living space to your liking. Waiting until 2024 may mean spending more time in rental properties, limiting your ability to make long-term changes and create a stable living environment. The stability of homeownership can have a positive impact on your overall quality of life.  Plus, buying a home now means that you won’t have to incur rent increases, or additional moving costs.

What If There's a Recession? 

While the likelihood of a recession is notable, it's not guaranteed. Recessions can be risky times to buy a home, especially if your financial stability is uncertain. Job loss, for instance, can reduce your chances of loan approval. Additionally, a recession can affect the local real estate market, leading to fewer buyers and sellers, limiting your options. However, if you're financially prepared, there are potential advantages to buying a home during a recession, such as reduced competition and the opportunity to make a valuable long-term investment. Keep in mind that the occurrence of a recession is not set in stone, and experts hold varying opinions. 

 Frequently Asked Questions (FAQs)

• Is 2023 a Good Year to Buy a House, or Should I Wait Until 2024?
  The year 2023 has seen substantial fluctuations in the real estate market. Mortgage rates have reached their highest point in two decades, and some economic experts anticipate a potential recession. High-interest rates can reduce your purchasing power, so those who choose to wait for lower rates may find themselves capable of affording a higher-priced home with lower mortgage payments. Ultimately, whether it's a favorable year to buy depends on your individual circumstances. If your need to move is immediate, it may be a good time to start your search. Explore your options and keep in mind that refinancing is an option if rates decrease later.

• Can I Buy and Sell a House Simultaneously?
  Yes, many people buy a new house while selling their old one at the same time. However, this can introduce additional challenges and stress, particularly if you're showing your current home while still residing in it. It's crucial to collaborate with a knowledgeable real estate agent who can assist you in finding the right buyer and suitable listings. Staying in close contact with your loan officer is essential to ensure a smooth process of transferring the proceeds from your sale towards your new down payment.

• Is the Housing Market Heading for a Crash?
  It's unlikely. While there is economic uncertainty, most experts do not anticipate a housing market crash. Home prices may decline in certain areas from the record highs seen during the pandemic, but this is expected to be more of a gradual and controlled adjustment rather than a catastrophic crash.

Deciding when to buy a home involves evaluating your personal financial situation and assessing your ability to pay a down payment. It's crucial to consider your chosen location and engage with a skilled local real estate agent to determine whether it's the right time for you to buy or if waiting for a more favorable market is the better choice.In conclusion, buying a home is a decision that comes with financial, personal, and emotional implications. The current real estate landscape offers attractive opportunities, including declining mortgage rates, the potential for equity growth, and valuable tax benefits. Waiting until 2024 could mean missing out on these advantages and potentially paying more for your dream home. If homeownership is part of your long-term plan, consider the benefits of acting now and securing your place in the real estate market.