Should You Buy A House Now?

Is it just too risky to buy a house now (in October 2022)?  Rising mortgage rates and consumer price index. 

Interest rates are going up in reaction to the consumer price index number that came out in September.  Currently, the average mortgage rate is 7.07%  (mid-October 2022) according to the Mortgage News Daily.  One month ago the rate was 6.35%.  So, as we know, it is much more expensive in October than it was in January to buy a home.  

If I hear "marry the house, date the rate," one more time... I think my head will explode.  It feels insensitive and lacks compassion for the homebuyer today.  Also, many homebuyers today do not have historical experience with higher rates.  This is a moment in time we should acknowledge and show sensitivity. 

To quickly put it in perspective... It is approximately $700/month more expensive right now to purchase a $400,000 home than it was in January.  This is causing many potential homebuyers to pause while they are adjusting their budgets. 

The chairman of the Federal Reserve, Jerome Powell, gave a speech in September. He said they are using their tools to 'forcefully' reduce demand and inflation by bringing into a better balance of supply and demand. 

"Reducing inflation will most likely require a sustained period of below-trend growth."

He also addressed softening labor conditions and how this will bring pain to households and businesses:

• Below-trend growth (not a crash)
• Softening labor conditions (can mean layoffs)
• Pain to households

So, what does this mean for you?

• You want to make sure your job is secure if you are in the housing market.
• Since the consumer price index came in high - there is an expectation the Federal Reserve will continue to raise rates.
• This can be a GREAT time to buy if you are able to afford a home.
• You should not feel rushed to buy. 

I want to share a couple of tips if you are buying:

• Consider having 3-6 months of living expenses in reserves (after down payments and closing costs). One of the main reasons people go through foreclosure is a major life circumstance that reduces income like the loss of a job, major illness, and/or divorce. 
• Protect yourself.  Make sure you are planning to stay 5 - 7 years and stay under 35% of your take-home pay.

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Interested in more tips, tricks, and strategies? Download a copy of my informative buyer's guide to help walk you through your home-buying process.  You can also visit my YouTube Channel for a series of videos about how to go about buying your next home.