I was talking to a good friend who is considering buying their first home when he said, “I’m worried about buying in a Seller’s Market”. Maybe you’re thinking the same thing.
It’s easy to feel overwhelmed when you’re hearing about bidding wars and properties that are receiving multiple offers and selling either at or above list price. It’s easy to think that there isn’t any equity left in the market. But there is. And buying a home is about a lot more than equity.
This topic reminds me of a Chinese Proverb I heard a few years ago.
Here are some things to consider if you’re looking to buy a home in 2021:
The first thing to consider is what your family needs. Do you want a home that is yours, that you make the decisions about. When you rent, you are at the mercy of the property owner. The property owner can decide to sell the property or limit your ability to make it your own. When you are the property owner, all of those choices are yours to make. Want a pet – that’s your choice. Want to paint every room white – that’s your choice.
You should also consider if now is the right time for you to buy financially. We don’t have a crystal ball but as of this writing mortgage interest rates are pretty low, meaning you can afford to buy more house than you could 5 years ago.
Do you have a down payment saved? If you do and you choose to wait, how do you plan to invest that money that will a) have a similar rate of return as Real Estate and b) keep your risk low so that when you are ready to buy, your down payment is available to you.
Where do you see yourself in 5 years? If you think you’ll be moving out of state in the near future and don’t want to be a landlord, maybe it does make sense to continue to rent. But consider this – let’s say you find a home that makes sense for you now and eventually you move, it’s not uncommon for property owners to keep their homes and rent them out with the help of experienced property managers and Real Estate Brokers. Keeping your home as an investment property gives you the double benefit of someone else paying your mortgage and the property increasing in value over time. Of course, this isn’t a guarantee but history has shown that Real Estate generally increases in value.
But I’m worried about the real estate market crashing like it did in 2008.
I hear you but consider this – THIS ISN’T 2008. The mortgage industry has stricter lending guidelines then they did prior to 2008. Yes, we don’t know what’s going to happen but major housing crashes aren’t that common. If you look back prior to 2008, the last major crash was The Great Depression and before that it was The Panic of 1873. Is it possible that we might see a market correction, sure but think of it like the stock market. Yes, there are adjustments but huge price changes are rare.
Here’s what I want you to take out of this:
With the right Real Estate team, buying a home doesn’t have to be scary – it can be intense but that’s the nature of moving yourself from one property to another. As a Real Estate Broker our entire job is to use market data to make sure you’re not over paying for a property – also remember, if you’re mortgaging the property you will have to get an independent appraisal which can confirm you’re making a wise investment.
Lastly, making the decision to buy a home is one of the best ways to ensure generational wealth.
If you’re considering buying a home in 2021, I’d love for you look through my Home Buying Guide. It will help you be completely ready to buy.
If you’re considering a purchase in 2021 I’d love to be on your team, hit me up for a virtual coffee date.