November 17, 2022 • 10 mins
If you’re thinking of buying a home, it’s important to consider a number of factors. These include your current financial situation, employment stability, and future plans. The market conditions themselves may not be as important as you think.
Full Show Notes / Article @ https://fthbpros.com/is-now-a-good-time-to-buy-a-home/
Now may be a good time to buy a home if:
- You have a stable job and income
- You have saved up for a down payment
- You are ready to commit to a long-term mortgage
If you have a stable job and income, now may be a good time to buy a home. Buying a home is a long-term commitment, so it’s important to be sure you can afford to make monthly mortgage payments. It’s also important to have saved up for a down payment, as this will help you get a lower interest rate on your mortgage, and give you more flexibility in the loans you can qualify for. Finally, if you are ready to commit to a long-term mortgage, now may be the time to buy a home.
On the other hand, you may want to wait to purchase a home if:
- You’re not sure about your job security
- You don’t have enough saved for a down payment
- You aren’t confident that you will be living in the same area for more than 2 years
- Your lifestyle may be changing. For example getting married, having kids, retiring, etc. that may require you to upsize or downsize your home in the very near future.
Ultimately, the decision of whether or not to buy a home is a personal one. You’ll need to carefully consider your own circumstances before making a decision.
Find all our episodes, articles, newsletter, and resources on our main site: https://FTHBPros.com
Looking for a local real estate agent outside of California? We’ve partnered with Home & Money, simply go to https://homeandmoney.com/FTHB/ and we’ll help connect you with a local, vetted agent.
Contact Information:
Philip Mastroianni – Loan Officer & Real Estate Agent
(949) 357-5029
Phil@HomeLoansPM.com
NMLS# 2141541
DRE# 02141890
Monica Mastroianni – Real Estate Agent
(951) 395-1848
Monica@HomesMM.com
DRE# 02099257
Legacy Homes Realty
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Philip (00:00):
Welcome to the first time home buyers
(00:01):
podcast by lone pros.
Today . I want to talkabout whether now is a
good time to buy a home.
I'm Phil Mastroianni andI'm a licensed mortgage
loan originator as well as alicensed real estate agent.
If you're thinking, is nowa good time to buy a home?
(00:24):
It's important to considera number of factors.
These include your currentfinancial situation, employment
stability, and future plans.
The market conditionsthemselves may not be as
important as you think.
But I do want to talka little bit about the
current market conditions.
As of this recording inNovember of 2022, we're moving
into a cooler, more buyersmarket where there's less
(00:47):
competitions on homes, But alot of that is driven by the
rapid price increases of thelast two years, along with
a large increase in mortgageinterest rates, which has made
it difficult to purchase a home.
What I ultimately want youto take away from this today
is that the market shouldn'tdictate when you buy.
It's something to consider, butyour financial situation and
(01:09):
budget should determine it more.
When is good time to buy homeIf you have a stable job
and income, you've savedup for a down payment,
and you're ready to committo a longterm mortgage.
You really do need that stablejob and income because it's
a long-term commitment andit's important to be sure that
(01:29):
you can afford to make thosemonthly mortgage payments.
It's also important to havesaved up for a down payment
As this will help you geta lower interest rate on
your mortgage and give youmore flexibility in the type
of loans you can qualifyfor as well as have equity
already built into your home.
That just gives yousome flexibility.
Finally, if you're readyto commit to a longterm
(01:51):
mortgage now may bethe time to buy a home.
On the other hand, you maywant to wait to purchase
a home if you're not sureabout your job security.
You don't have enough savedup for a down payment.
You aren't confident thatyou'll be living in the
same area for more than twoyears or your lifestyle's
going to be changing.
For example, getting married,having kids retiring that
(02:12):
may require you to upsizeor downsize your home.
Really quickly after purchasing.
That's just notsomething you want to do.
Ultimately the decisionof whether or not you buy
a home is a personal one.
You'll want to carefullyconsider your own circumstances
before making a decision.
The other factor thatI talked about earlier
(02:33):
is market conditions.
If you're thinking ofbuying a home, you really
want to be paying attentionto market conditions.
Are the prices rising?
Are they falling?
Is the market hot?
Is it cold?
These factors can impact yourdecision of whether or not now
is a good time to buy a home.
And also possibly the typeof home you're going to buy.
Let's talk about buying a homein a hot market, typically
(02:55):
called a sellers market.
This is characterized by lowinventory, high prices and lots
of competition in this market.
It may be difficult tofind a home that meets
your needs and budget.
You may also end up payingmore for your home than you
would in a cooler market.
Does that mean it'sa bad time to buy?
Not necessarily.
Let's break it Low inventorymeans you have less
(03:18):
options to choose from.
This means you may need to get alittle out of your comfort zone.
This is from either a priceor a physical standpoint.
You may need to look at slightlyhigher priced homes to find
what you're looking for, or lookat homes that are under your
budget, but will have an overask price to be competitive.
Nobody wants to overpayfor a home, but real
(03:40):
estate is one of those fewassets that consistently
appreciate over time.
An average home appreciatesbetween three to 6% annually.
And when we look at averagehome price index appreciation
from 1975 to 2014, which was oneof the larger stats that I was
able to pull California homesappreciated at 6.77% annually,
(04:03):
Colorado at 5.25% Florida 4.09%.
Georgia at 3.49% NorthCarolina at 4.06%.
New York at 5.57% andVirginia, a 4.92% to just
give some general examplesacross the country.
What this is really sayingis that you can realistically
(04:24):
overpay by 3% or more andexpect to see that made up
within the first year or two.
And in some areas withinthe first six months
of home ownership.
With lower inventory.
You may need to look for homethat isn't quite turnkey.
You may need to remove therequirement for things like a
pool or a remodeled kitchen.
Look at things in a homethat you can't change.
(04:48):
And make sure those areyour base requirements.
Things like location, numberof bedrooms and bathrooms,
and lot size are all muchharder to change than
things like paint, colors,appliances, or even the types
of countertops in your kitchen.
Think long term.
You can work on a majorproject each year, start with
the kitchen, then maybe thebackyard, the following year,
(05:08):
given this flexibility, you canoften time your projects to be
worked on during off seasons.
When contractors havemore time and often give
homeowners a discount.
It's also a great time toroll up your sleeves, do
some of the work yourselfto save some money.
Another option is to putyourself on a longer time
plan and use the equity inyour home to do a complete
(05:30):
remodel, consider a homeequity line of credit or
HELOC, which allows you todraw money as you need it.
And usually comes withlower interest rates than
many other types of loans.
This particular programpulls money directly
from your home's equity.
And you can use that to doall of your upgrades and
remodeling this, lets your homeequity, do the work for you.
(05:52):
Now let's take into buying in acooler market or buyer's market.
This is typically characterizedby higher inventory, lower
prices and less competition.
In this type of market,you'll have more options to
choose from and may be ableto find a home that better
meets your needs and budget.
If you're considering buyingin a cooler market, there
are still some things tokeep in mind first, while
(06:14):
prices may be lower, they maynot stay that way for long.
It's important to have arealistic idea of what you
can afford and to consult witha real estate professional,
to get an idea of how muchhome you can realistically
expect to get for your budget.
With higher inventories, youdo have a lot more options,
but it's important to still bedecisive and not get caught up
(06:37):
in the paralysis of analysis.
It can be easy to get caughtup in looking at too many homes
and never making a decision.
But it's important to rememberthat the longer you take
to make a decision, themore the market can change.
It's better to stay withinyour budget and look for home
that meets as many of yourrequirements as possible.
If you see prices droppingin general, it's very
(06:59):
important to have an agentthat understands the current
conditions and can guide youin the proper offer amount.
You can only get a loan for theamount that home appraises for.
So it's important to makesure you aren't overpaying.
Even if prices in thearea are dropping.
As new homes are sold at lowerprices, the value of your
home will technically drop.
(07:20):
So make sure to movequickly on your offers
and getting appraisalsdone as soon as possible.
This helps ensure that theoffer price and the appraisal
price lineup, and you can beconfident in the transaction.
Not every seller's willingto lower the price.
If an appraisal comes low,and you don't want to have to
come out of pocket to coverthe difference, especially
in a cooler market withprices already dropping.
(07:43):
The question then comes upwith, should I keep waiting
for prices to drop more?
It really depends on yourpersonal circumstances,
but in general, if you seehome that meets your needs.
It may be best to goahead and make an offer
in a cooler market.
There's less competition.
So you may not have toworry about multiple offers
driving up the price.
It's also important toremember that while prices
(08:05):
may be dropping in general.
They may not drop in aspecific neighborhood or type
of home you're looking for.
So if you find a home thatyou love and it's within your
budget, it may be best to goahead and make an offer rather
than risk waiting too long andmissing out on that dream home.
As we can see from the 30plus years of real estate
price, history, homes donot decline and in price
(08:26):
for long and over the longterm, have a more than 3%
average appreciation annually.
The last note to consider.
Is what your payment will belooking like in the future.
If you're currently renting,you can expect your rent
to increase anywherefrom one to 5% each year.
So far in the last 20years, the national median
(08:47):
rent has increased atan annual rate of 4.17%.
Year over year rent changeshave not fallen to a
negative rate since 1934,almost a hundred years ago.
So you shouldn't expect yourrent to ever drop or even stay
the same from lease to lease.
Your mortgage payment neverchanges for the lifetime of your
(09:09):
loan on a fixed rate mortgage.
The principal and interestare never going to change
on a standard loan, but theinsurance and taxes can change
depending on your location.
And then also you might haveHOA dues consider this as just
part of your long-term planning.
How much easier would it beif you were paying the same
rent as you did 15 years ago,would you be able to save
(09:31):
up for things like vacationsremodeling or even retirement?
And once you've paid yourhome off in 30 years, all you
have left to pay is taxes,insurance and possibly HOA dues.
So in summary, it's best to befinancially ready to buy a home.
And the market doesn't need todictate whether or not it's a
good time to buy there's prosand cons to any market, but in
(09:51):
the end, It really depends onyour personal circumstances.
If you're looking to buy home,don't let the market scare
you off because honestly,nobody can time the market
just like you can't time.
The stock market.
When you're ready,the time is right.
Don't put off buying becausethe market isn't perfect
because it will never be.
I hope this has helped makeyou a more informed home buyer.
Welcome to the first time home buyers
(00:01):
podcast by lone pros.
Today . I want to talkabout whether now is a
good time to buy a home.
I'm Phil Mastroianni andI'm a licensed mortgage
loan originator as well as alicensed real estate agent.
If you're thinking, is nowa good time to buy a home?
(00:24):
It's important to considera number of factors.
These include your currentfinancial situation, employment
stability, and future plans.
The market conditionsthemselves may not be as
important as you think.
But I do want to talka little bit about the
current market conditions.
As of this recording inNovember of 2022, we're moving
into a cooler, more buyersmarket where there's less
(00:47):
competitions on homes, But alot of that is driven by the
rapid price increases of thelast two years, along with
a large increase in mortgageinterest rates, which has made
it difficult to purchase a home.
What I ultimately want youto take away from this today
is that the market shouldn'tdictate when you buy.
It's something to consider, butyour financial situation and
(01:09):
budget should determine it more.
When is good time to buy homeIf you have a stable job
and income, you've savedup for a down payment,
and you're ready to committo a longterm mortgage.
You really do need that stablejob and income because it's
a long-term commitment andit's important to be sure that
(01:29):
you can afford to make thosemonthly mortgage payments.
It's also important to havesaved up for a down payment
As this will help you geta lower interest rate on
your mortgage and give youmore flexibility in the type
of loans you can qualifyfor as well as have equity
already built into your home.
That just gives yousome flexibility.
Finally, if you're readyto commit to a longterm
(01:51):
mortgage now may bethe time to buy a home.
On the other hand, you maywant to wait to purchase
a home if you're not sureabout your job security.
You don't have enough savedup for a down payment.
You aren't confident thatyou'll be living in the
same area for more than twoyears or your lifestyle's
going to be changing.
For example, getting married,having kids retiring that
(02:12):
may require you to upsizeor downsize your home.
Really quickly after purchasing.
That's just notsomething you want to do.
Ultimately the decisionof whether or not you buy
a home is a personal one.
You'll want to carefullyconsider your own circumstances
before making a decision.
The other factor thatI talked about earlier
(02:33):
is market conditions.
If you're thinking ofbuying a home, you really
want to be paying attentionto market conditions.
Are the prices rising?
Are they falling?
Is the market hot?
Is it cold?
These factors can impact yourdecision of whether or not now
is a good time to buy a home.
And also possibly the typeof home you're going to buy.
Let's talk about buying a homein a hot market, typically
(02:55):
called a sellers market.
This is characterized by lowinventory, high prices and lots
of competition in this market.
It may be difficult tofind a home that meets
your needs and budget.
You may also end up payingmore for your home than you
would in a cooler market.
Does that mean it'sa bad time to buy?
Not necessarily.
Let's break it Low inventorymeans you have less
(03:18):
options to choose from.
This means you may need to get alittle out of your comfort zone.
This is from either a priceor a physical standpoint.
You may need to look at slightlyhigher priced homes to find
what you're looking for, or lookat homes that are under your
budget, but will have an overask price to be competitive.
Nobody wants to overpayfor a home, but real
(03:40):
estate is one of those fewassets that consistently
appreciate over time.
An average home appreciatesbetween three to 6% annually.
And when we look at averagehome price index appreciation
from 1975 to 2014, which was oneof the larger stats that I was
able to pull California homesappreciated at 6.77% annually,
(04:03):
Colorado at 5.25% Florida 4.09%.
Georgia at 3.49% NorthCarolina at 4.06%.
New York at 5.57% andVirginia, a 4.92% to just
give some general examplesacross the country.
What this is really sayingis that you can realistically
(04:24):
overpay by 3% or more andexpect to see that made up
within the first year or two.
And in some areas withinthe first six months
of home ownership.
With lower inventory.
You may need to look for homethat isn't quite turnkey.
You may need to remove therequirement for things like a
pool or a remodeled kitchen.
Look at things in a homethat you can't change.
(04:48):
And make sure those areyour base requirements.
Things like location, numberof bedrooms and bathrooms,
and lot size are all muchharder to change than
things like paint, colors,appliances, or even the types
of countertops in your kitchen.
Think long term.
You can work on a majorproject each year, start with
the kitchen, then maybe thebackyard, the following year,
(05:08):
given this flexibility, you canoften time your projects to be
worked on during off seasons.
When contractors havemore time and often give
homeowners a discount.
It's also a great time toroll up your sleeves, do
some of the work yourselfto save some money.
Another option is to putyourself on a longer time
plan and use the equity inyour home to do a complete
(05:30):
remodel, consider a homeequity line of credit or
HELOC, which allows you todraw money as you need it.
And usually comes withlower interest rates than
many other types of loans.
This particular programpulls money directly
from your home's equity.
And you can use that to doall of your upgrades and
remodeling this, lets your homeequity, do the work for you.
(05:52):
Now let's take into buying in acooler market or buyer's market.
This is typically characterizedby higher inventory, lower
prices and less competition.
In this type of market,you'll have more options to
choose from and may be ableto find a home that better
meets your needs and budget.
If you're considering buyingin a cooler market, there
are still some things tokeep in mind first, while
(06:14):
prices may be lower, they maynot stay that way for long.
It's important to have arealistic idea of what you
can afford and to consult witha real estate professional,
to get an idea of how muchhome you can realistically
expect to get for your budget.
With higher inventories, youdo have a lot more options,
but it's important to still bedecisive and not get caught up
(06:37):
in the paralysis of analysis.
It can be easy to get caughtup in looking at too many homes
and never making a decision.
But it's important to rememberthat the longer you take
to make a decision, themore the market can change.
It's better to stay withinyour budget and look for home
that meets as many of yourrequirements as possible.
If you see prices droppingin general, it's very
(06:59):
important to have an agentthat understands the current
conditions and can guide youin the proper offer amount.
You can only get a loan for theamount that home appraises for.
So it's important to makesure you aren't overpaying.
Even if prices in thearea are dropping.
As new homes are sold at lowerprices, the value of your
home will technically drop.
(07:20):
So make sure to movequickly on your offers
and getting appraisalsdone as soon as possible.
This helps ensure that theoffer price and the appraisal
price lineup, and you can beconfident in the transaction.
Not every seller's willingto lower the price.
If an appraisal comes low,and you don't want to have to
come out of pocket to coverthe difference, especially
in a cooler market withprices already dropping.
(07:43):
The question then comes upwith, should I keep waiting
for prices to drop more?
It really depends on yourpersonal circumstances,
but in general, if you seehome that meets your needs.
It may be best to goahead and make an offer
in a cooler market.
There's less competition.
So you may not have toworry about multiple offers
driving up the price.
It's also important toremember that while prices
(08:05):
may be dropping in general.
They may not drop in aspecific neighborhood or type
of home you're looking for.
So if you find a home thatyou love and it's within your
budget, it may be best to goahead and make an offer rather
than risk waiting too long andmissing out on that dream home.
As we can see from the 30plus years of real estate
price, history, homes donot decline and in price
(08:26):
for long and over the longterm, have a more than 3%
average appreciation annually.
The last note to consider.
Is what your payment will belooking like in the future.
If you're currently renting,you can expect your rent
to increase anywherefrom one to 5% each year.
So far in the last 20years, the national median
(08:47):
rent has increased atan annual rate of 4.17%.
Year over year rent changeshave not fallen to a
negative rate since 1934,almost a hundred years ago.
So you shouldn't expect yourrent to ever drop or even stay
the same from lease to lease.
Your mortgage payment neverchanges for the lifetime of your
(09:09):
loan on a fixed rate mortgage.
The principal and interestare never going to change
on a standard loan, but theinsurance and taxes can change
depending on your location.
And then also you might haveHOA dues consider this as just
part of your long-term planning.
How much easier would it beif you were paying the same
rent as you did 15 years ago,would you be able to save
(09:31):
up for things like vacationsremodeling or even retirement?
And once you've paid yourhome off in 30 years, all you
have left to pay is taxes,insurance and possibly HOA dues.
So in summary, it's best to befinancially ready to buy a home.
And the market doesn't need todictate whether or not it's a
good time to buy there's prosand cons to any market, but in
(09:51):
the end, It really depends onyour personal circumstances.
If you're looking to buy home,don't let the market scare
you off because honestly,nobody can time the market
just like you can't time.
The stock market.
When you're ready,the time is right.
Don't put off buying becausethe market isn't perfect
because it will never be.
I hope this has helped makeyou a more informed home buyer.
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