With Home Prices and Interest Rates in Constant Turmoil, Should You Wait to Buy a Home?

Every day, there’s a new article from a renowned organization highlighting the benefits and pitfalls of buying a home right now.

Some scream that we’re heading to a recession, where home prices are bound to fall. Others highlight data showcasing that the market is still strong despite rising rates. Some outlets constantly guess the Federal Reserve’s next move, describing what will happen if rates continue to rise or stay stagnant. 

With all the chaos, varying opinions, and shock pieces about the economy floating all over the internet, it’s tough for regular folks to make sense of it. 

Is buying a home now a good idea? Should you wait? Should you sell a house you currently have?

The truth is these decisions are deeply personal. Each person has their own risk tolerance, goals, and circumstances, so no expert who doesn’t know your individual situation can determine what’s best for you. 

However, the R/realestate Reddit community is a great place for those seeking viewpoints from real people facing similar questions. While enjoying the community, I stumbled upon a thread where the Original Poster (OP) shared that they are closing on a house soon and explained why people shouldn’t be afraid to purchase a home in the current climate.

OP Says You Should Stop Wondering If You Should Buy A House 

OP titled their piece “Stop Wondering if You Should Wait to Buy a Home” and explained why they’re thrilled to close on their new house in two weeks. 

Their reasons included everything from the feeding frenzy sure to begin the second rates drop to the problematic approach of waiting for a crash. 

For those that are still waiting for a crash, you are going to be waiting a long time – We are something like 4-6 million homes under built in the US,” the OP stated, adding, “The other reason we won’t see another 2008 is because the average LTV of current homeowners is A LOT lower than it was in 2008.”

The OP also explained that 7% isn’t that high for interest rates, as it was much higher in previous decades, and homebuyers can easily refinance if rates drop anyway. 

Reddit Users Split on Whether OP is Right

Though the OP remains ecstatic about their purchase, not everyone in the sub agreed. Some added additional caveats, while others vehemently disagreed with the overall assessment. 

Never Time the Market

One of the most basic tenets of investing is that you shouldn’t try to time the market. The same is valid with real estate investing, whether you are buying for yourself or trying to get a loan for an investment property

In that sense, OP is correct. There’s no sense waiting if you can comfortably afford to buy in this market. 

One user summed it up nicely “Does anyone even know a person who waited for the rates to drop and then REALLY managed to buy for cheaper?” they asked. “Because I sure don’t. Everyone who says that seems to just end up buying higher, later on.”

Don’t Buy More Than You Can Afford

One user agreed with the overall premise but added an important caveat: “Only buy what you can comfortably afford and want to stay in,” they advised. 

They explained that rising rates made homeownership out of reach for millions of middle class families, and some who attempt to buy anyway may put themselves at risk for financial disaster. 

Another user stressed that ARM (adjustable rate mortgages) might look attractive, but you should never expect rates to drop. Ensure you can handle ballooning payments in case of rising interest rates

Affordability the Biggest Problem

Others saw OP’s post as a humble brag, saying they couldn’t afford to purchase a house right now even if they wanted to. 

“I’m not choosing to wait, I’m forced to wait,” replied one.  “It’s simply too expensive with prices what they are alongside the high-interest rates.”

“Exactly,” added another.  “Where I am, I’m priced out by the rates and prices staying high. I’m not making a choice not to buy.”

“I have a healthy 20% down payment, a six-figure salary, and live in a lcol area. I can’t afford a house in my local market,” said a third user. 

Home Prices Declining

Many users straight-up disagreed with OP, saying home prices are declining in many major areas. 

“If I was in the position to wait, I would. Yes, there is little inventory, but economic indicators are not looking good almost everywhere you look,” they said, adding that they work in the foreclosure industry. 

“I wholeheartedly disagree,” stated another.  “Most homes are vastly overpriced, because everyone saw the spike in 2020-2022 and thought they could cash in. With rates this high and mostly overpriced homes, it’s a horrible time to buy.”

Nobody Knows the Future

One Redditor said that the problem with OP’s statement is that they think they know what will happen with the housing market in the future. 

“The op acts like they are so smart and know where prices are going,” they state.  “The point is nobody knows. So buying a home shouldn’t be dependent on guessing where prices are going.”

Another added a comment from a different perspective. “I can’t tell you how many of my buyers in 2019-2020 decided to wait,” they shared. “Now they can’t afford a home because they were waiting for a crash..they could have had 2.5-3% rates on homes that were priced about 40% lower.”

So…Should You Wait to Buy a House?

Regular people are just as divided as the news media. Some think you should dive in if you can afford it, while others fear a pending recession. 

The only one who can make the decision is you. 

As the OP said, if you’re in a great financial position where you have the money for a decent downpayment, can afford the payments with a higher interest rate, and plan to stay in the house long-term, it might not be a bad idea. 

However, as others pointed out, you may find yourself laid off in a coming recession or underwater on your mortgage if prices fall, so if you choose to buy now, it’s best to proceed with caution. 

This post was inspired by a Reddit thread posted to the R/realestate community and shouldn’t be construed as financial advice. Please speak to a certified financial planner or advisor for advice specific to your individual situation.