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Waiting to buy a home is a move you might regret.
Key points
- Home prices rose almost 19% in 2021.
- Despite higher prices, one real estate guru thinks buyers shouldn't delay their plans to purchase homes.
To say that today's housing market is loaded with inflated home prices would perhaps be an understatement. In 2021, home prices rose 18.8%, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. That's the most substantial increase in 34 years, and it's easily higher than 2020's 10.4% home price gain.
If you're inclined to put off your home search in light of these numbers, you're probably in good company. But if you ask real estate expert Barbara Corcoran, that's not necessarily a smart move.
Corcoran says it might not pay to wait
Home prices may be sky-high today, but there's a good chance they'll continue to climb. And for that reason alone, prospective buyers may want to act sooner rather than later, according to Barbara Corcoran.
As the founder of the Corcoran Group, a major real estate firm, and a star on the hit series Shark Tank, Corcoran knows a thing or two about the housing market. And so it pays to heed the advice Corcoran gave in late 2021, which is essentially that it's unwise to wait on buying a home.
Of course, that advice comes with a caveat. If you can't find a suitable home, then obviously, you may have no choice but to sit tight and wait for more inventory to hit the market. Corcoran does not advise going out and buying a home that isn't suitable simply to complete that transaction sooner rather than later.
However, if you are able to find a home that meets your needs and is being offered at a price point you can swing, then it pays to put in an offer rather than hold off. If you delay your home purchase in the hopes that prices will come down, you may end up disappointed.
Granted, there's always a chance that home prices will start to slide in 2022. But Corcoran said late last year that she doesn't see that happening. And given that Goldman Sachs predicted home prices will increase by another 16% by the end of 2022, waiting is a risk many buyers can't afford to take.
You may want to take advantage of today's mortgage rates
Rising mortgage rates also make the case for acting sooner rather than later. So far, rates are already higher than they were at any point in 2021, and that trend could continue as the Federal Reserve moves forward with plans to implement several rate hikes this year.
The Fed is not in charge of setting mortgage rates, or any consumer borrowing rates. Rather, it dictates what rate banks charge one another for short-term borrowing purposes. But the actions of the Fed tend to impact mortgage rates, so buyers who wait to apply for a home loan could end up getting stuck with higher borrowing costs later on in the year.
Should you hold off on buying a home?
If you haven't yet saved enough to buy a home or haven't found a suitable home based on your personal criteria, then waiting pays. But if you're seeing homes you can afford and that check off the right boxes, Corcoran says it's smart to get moving.
While there's a chance home prices could come down this year, they could also rise. Combine that with a steady uptick in mortgage rates, and it's clear that holding off on buying comes with its share of risk.
A historic opportunity to potentially save thousands on your mortgage
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
The Ascent's in-house mortgages expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!). Click here to learn more and see your rate. While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See The Ascent's full advertiser disclosure here.
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