Numbers Count: Is it a good time to buy?

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Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.

Young couple looking at real estate offerings in a storefront window.The numbers: Sixty-three percent of consumers say now is a good time to buy a home – one more indicator of consumer confidence about homeownership heading into spring, according to Fannie Mae’s February Home Purchase Sentiment Index (HPSI). The monthly survey, released March 7, found that 63% of respondents say that it is a good time to buy a house, up from 61% in January, the lowest reading in the survey’s six-year history. In a survey high, 87% of respondents say they are not concerned about losing their job.

What counts: What makes it a good time to buy? I encourage people to ask this question two ways: Is it a good time generally to buy? And, is it a good time for you to buy? Here are some points to consider on both fronts:

When considering if it is a good time generally to buy, I like to ask these questions:

  1. How’s the economy? Our Chief Economist Scott Anderson is relatively upbeat about the outlook for the U.S. economy and expects 2.1% GDP growth in the first quarter.
  2. Are interest rates low? Even after the Federal Reserved raised short-term rates in December, mortgage rates remain near historic lows. The average rate on a 30-year, fixed-rate mortgage last week was 3.89%, according to weekly data released March 9 by the Mortgage Bankers Association.
  3. Are home values rising? Today, yes. When home prices are declining, buyers may need to think twice about investing in a home that may decrease in value. But in recent years, home prices have been rising in most U.S. markets. In December, home prices nationally were up 5.4% from a year earlier, according to the latest S&P/Case-Shiller Home Price Index.

Many of us decide we want to buy a home because we need it and we aren’t looking for the perfect moment to buy. That said, being aware of economic conditions may help potential buyers understand what to expect in the housing market. But you also should consider your own financial situation to determine if you are ready to buy a home.

Here are some questions to ask when considering if you are ready to buy:

  1. What’s your job situation? As the recent Fannie Mae survey shows, 87% of respondents say they are not concerned about losing their job. Having a stable job is an important consideration when looking to buy a home.
  2. How’s your credit report and credit score? You can receive a free copy of your credit report to review your outstanding debt and credit availability (learn more about this from the FTC).
  3. Have you saved for a cash down payment? Keep in mind you don’t necessarily need 20% cash down to buy a home. While 20% cash down provides some advantages, you may qualify for a mortgage with as little as 3% cash down.
  4. Are you ready for homeownership? Owning a home comes with responsibilities, including maintenance, property taxes and insurance, not to mention the biggie: a monthly mortgage payment. If you have a steady job, you’ve managed your finances well (as reflected in a healthy credit report and credit score), and you’ve put sufficient money aside for a down payment, you may be on the path toward home ownership. But before you take the plunge, step back and ask how long you expect to live in one place. Are you prepared to deal with broken plumbing and furnaces, or do you prefer to just call a landlord?

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