“Don’t Buy a house in Greater Seattle!”
This is the advice I hear some people say. These same people say, “The market is crashing so buyers should wait.” Just look at this article from the Seattle times (https://www.seattletimes.com/business/real-estate/seattle-is-americas-fastest-cooling-housing-market-redfin-says/)….”Seattle is America’s fastest-cooling housing market…” Does this mean buyers should not buy now? Would it be more prudent to wait? That’s what we’re answering today.
I got a call yesterday from a lovely person named Kate who is looking to make a home purchase. Like any prudent buyer, she has concerns regarding the Seattle market and market timing.
Kate’s been following the news and market and knows we are in the midst of a market correction. Let me repeat, if you didn’t know it, we are in the midst of a market correction. This can cause some people to panic. We often hear sensationalism from news outlets (because that sells), social media, and even YouTubers. The fact is, prices have dropped, they will probably continue to soften. Obviously, Kate and the rest of you buyer should wait to purchase a home. Or should you?
Not to be vague or wishy washy, but it depends.
You should absolutely, without question, not purchase a home if you can’t afford it. I cannot stress this enough. It all starts with your financial wellbeing. You can’t be a truly happy homeowner when you are financially strapped.
You also shouldn’t purchase a home if you aren’t ready. In other words, just because your friends own homes or some dude on YouTube says investing in real estate is a smart move, doesn’t mean this lines up with your personal timing and goals.
Another reason not to purchase is when you don’t love the home. Please don’t take this out of context. I’m not saying you’ll find your luxury dream mansion with all the bells and whistles when you can barely qualify for an entry-level studio. But when considering your budget, if you still love the property and look forward to calling it home for years to come, that’s a good sign.
That brings me to the next point, which is not buying if you don’t think you’ll own the property for at least 5 years. Longer is better. Real estate doesn’t always go up in value. That’s why you want to have staying power, especially when the market isn’t in your favor. The longer you can own a property, the higher the chances that it will appreciate over time.
I can hear some of you say “But Sterling, as buyers we should wait for the market to drop more before buying.” Fine, you can do that. Maybe that’s the right decision for you. But consider these 3 thoughts.
1) It’s not timing the market, it’s time IN the market that matters. You’ll hear financial advisors and seasoned real estate investors say this. And I agree.
2) You aren’t buying the entire market. You are buying a specific property, and your home. When you find a home you love, and it checks the important boxes, fulfilling your needs, AND you feel you are getting a great deal (heck, maybe even a bit under market value), that’s a good strategy to make a purchase vs. trying to time the market bottom.
3) As mentioned, prices will probably go down more in the near future. But that doesn’t mean things will necessarily get more affordable because of the rising interest rates. Here’s a question… what has a lower monthly mortgage payment? A $1 million dollar home loan at a 6% rate or a $900,000 home loan at a 7.5% interest rate? The answer is, (even it’s a $100,000 more expensive) the $1 million dollar property, actually costs less per month because it has the lower rate. So again, unless you are buying with all cash, consider the affordability regarding your monthly mortgage payment and interest rate vs. just looking at the price alone. And, when rates do go down again, and they will, it’s just a matter of when, you can always refinance.
My advice is this. Emotions run high when buying a home. Don’t panic. Definitely, don’t rush into a home purchase. Also, don’t wait too long if buying a home would improve your quality of life and financial goals. Ultimately, the right time to buy a house depends on your specific situation. Are you financially ready and able? What are your specific goals and your personal timeline? Do you want to purchase now, or would you rather wait? Only you can answer that.
If you’ve made it this far and you are new here, my name is Sterling and I’m a Managing Real Estate Broker in Seattle. If you want to stay in the know regarding the Greater Seattle real estate market, then do us both a favor and click that like and subscribe button. And Kate, thanks for inspiring today’s topic. See you all soon!