This is the question of the year!
Prices are high and it seems like they are only climbing and that is the truth. Prices have increased 13% in the last couple of years (as of January 2019) and have continued to rise since then. Many buyers wonder if they should wait until the market falls again before they take the leap and buy.
And, honestly, it really depends on your situation and what is the best scenario for you. If your plan is to live in a home for only a couple of years and then sell it, this may not be the right time for you to buy. Here me when I say, it may be best for you to wait out the market for another year or so. I obviously can’t predict where the market will go but we are overdue for a decline. With the cost to sell a home about 10% of the home value you would really need to prices to continue to increase in order to make a profit or have a chance of breaking even in two years when you are ready to sell. Now, that being said, if interest rates start to increase that will be more concerning to your purchasing power than home prices and it would be a good sign to jump into the buyer pool. The same can be said for rental prices. If you are currently renting and your rent is below market value there may be no reason to find a home to buy at the moment, if instead you’re rent is increasing it may actually be less expensive to make a mortgage payment and you can save the difference between the two (rent and mortgage) for when you choose to sell your home.
However, if your plan is to purchase a long term home (5+ years) you are more than likely in a good spot. Yes, prices are risen pretty drastically recently, especially for the Spokane area as we aren’t used to price increases like this. But, interest rates are relatively low and have all the signs of rising. The rise in interest rates takes away much more purchasing power than the rise in home prices. Additionally, statistics show that purchasing at any point in any market was a good purchase as long as the homeowner stayed in the home for at least 5 years. The interest deductions during tax time, building equity in your home are added benefits to owning.
The same can be said if you plan to purchase a home and then rent it after a few years or if you are planning to purchase land and build a home. Home builders building in developments are definitely charging top dollar for homes at the moment. Those that build on your land (and we have quite a few in the Inland Northwest) often are still at a fair market value and you usually end up with some equity when complete.
As always, I’m happy to go into more depth or answer any questions so please leave any questions below. There are so many aspects to purchasing a home in this market and figuring out if it is the right time for you that it is difficult to sum it up in a few paragraphs! Just remember, I am a resource so please reach out!