PFT #20 - Personal Finance Tip: When is the Right Time to Buy a House?
Updated: Jun 10, 2021
It is the beginning of Spring and this is the time of the year where house buying goes on terror.
Especially, with low interest rates, lack of labor and supply these are the right ingredients to create a unprecedented housing market. (4/2021)
For example: Since April of 2020 lumber prices have jumped 200% and are adding approximately $24,000 to the price of a new home. Prices for steel have risen 22% in the last three months.
Since April of 2020 the price for copper has risen 191%.
In December 2020, the median price for a single-family home increased 13.4% from a year ago to $340,000.
So what does this mean for you? As long as there's strong demand and with low inventory, prices will increase.
For many people, even if they budget well, this may be the worst time to buy a home; and that is because before too long the housing bubble may likely burst.
The question is, should you get in now before this happens?
If you are going to be a first time buyer, you may priced out of the market.
If you sell a current home, you may get a great price - perhaps it may be part of a bidding war; however, when you go to buy the new home, you may be part of that bidding war. If you are not in a rush to get that first home, then banking your money for the next few years may be to your advantage.
When the market comes down you may get your pick of houses on sale.
If you want to sell your current home and can afford to “pay up” for the next home, then you are in good shape; but beware not to bite off more than can chew - and make sure that you have the money to furnish it.
If you are in a position where your budget is saddled with large amounts of debt, selling your home may be a blessing in disguise.
Consider selling your home, then downsize for a few years and lower that monthly living expense.
In the meantime, pay off those nagging debts and get your budget in shape.
Most importantly, make sure that you have the money to pay for your home as it is a huge commitment.
67% of the population does not budget which means most people don’t really know what they can afford.
Don’t get caught up with FOMO and remember keeping up with the Jones’s is simply not worth it.