As February approaches, so does the time of the year when prospective home buyers begin looking for an advisor to help them on their buying journey. Buying a home is one of the most important personal and financial decisions that you’ll make in your life, so it is essential that you understand the journey you are about to embark upon.
Complex and seemingly contradictory economic headlines have led many potential buyers to approach the market cautiously. While it’s easy to prioritize mortgage rates in your decision-making process, the economy is just one factor, but should not be the sole deciding factor. Your personal finances, life journey, and local market trends should all be taken into account and given their own weight.
There are a number of elements that could make this the ideal time for you to buy a home. Engel & Völkers has compiled a list of some of the most important factors to consider.
Finances
Credit. A high credit score will help you lock in a lower interest rate—which could save you substantially over the lifetime of your loan.
Savings. While your down payment should cover 5 - 20% of the listing price, it’s essential to have extra cash—be it in savings or other sources—so you can have a fallback in case of a job loss or need for major repairs.
Debt. Lenders considering your mortgage applications will be sure to look at your debt-to-income ratio. As its name implies, this number gives insight into how much of your monthly income is being used to pay off debts. Most lenders look for a ratio lower than 28%.
Market Prices vs. Your Budget: While the economy influences both listing prices and your budget, higher market prices do not necessarily mean your dream home is unattainable. The trick is to evaluate the homes available in your preferred market in your desired price range to see if they meet your needs.
Investing in Your Future
Recently, you’ve probably heard a lot about fluctuating mortgage rates and inflation. While these headlines may make you hesitant to buy a home, there are also more positive aspects to consider in support of your home buying journey. Here are a few:
Pending home sales surging: Despite recent turmoil due to high mortgage rates, pending home sales have seen their biggest increase since 2020. Piggybacking off of stabilizing home prices and decreasing mortgage rates, many anticipate that 2024 will be a positive year for homebuyers.
Prices are stabilizing: Despite a slowdown in the real estate market, home prices are still stabilizing. Postponing the decision to buy a home in anticipation of price drops may have the opposite effect, leading to a more expensive purchase.
A substantial investment: As prices around the world rise, property values also increase—ensuring that real estate remains a stable investment. A home you purchase today could be worth significantly more in the future.
Timing
Like many others, you’ve probably considered whether today’s environment is conducive to your home buying goals. While mortgage rates and inflation are meaningful considerations, the real question is whether you are ready to buy a home.
Life events such as starting a family, relocating for a new job, or even finally having enough savings to enter the real estate market can play a role in your decision to buy a home. Don’t delay in taking the next step in your life.
National vs. Local Trends
Finally, most headlines focus on national and international housing trends—not those impacting your local market. It’s important to research local housing conditions, specifically mortgage rates, housing inventory, and listing prices. That’s where one of our local experts can assist you in this critical part of the process. Reach out to an Engel & Völkers advisor to get started. Click here to discover markets predicted to have the most home sales in 2024, and why these cities are on the radar.
To properly assess your local market, it’s essential to work with an expert real estate advisor like those at Engel & Völkers—who, first and foremost, are your neighbors. Our local advisors have a comprehensive understanding of the trends affecting their markets and are well-equipped to evaluate how the market looks given your personal circumstances.