5 Pros and Cons of Buying An Ann Arbor Home Now or Waiting.
Buying a home in Ann Arbor now is more expensive than ever. Mortgage rates have doubled, house prices continue to rise, and there’s not much to choose from in the market. Before jumping into this market, casual and less qualified buyers should look carefully at their finances and personal situations. If, however, you are motivated to get into a home. And have the basics to write a competing offer quickly; great homes are hitting the market regularly. While there are signs of inventory rising and home price increases flattening out, suitable homes in excellent condition and location are still moving fast. So get with an agent that shares your motivation and make your move.
Have these homeownership basics in place before entering the market
To successfully purchase an Ann Arbor area home in today’s market, you must be highly motivated and prepared. If you are in the early stages, buyers work to get these items in place. You are ready to go if these statements are true:
- You are committed to homeownership; on a scale of 1-10, you are an 8-10.
- You have a long time horizon – see yourself owning this home for many years.
- You have employment income that feels sustainable or improvable in the future.
- You have savings for a downpayment, moving, and the costs of setting up a new home, plus savings in an emergency.
- You are approved for a mortgage with a payment you can afford that will secure an acceptable property – even if interest rates rise.
- You understand the operating and maintenance costs associated with owning a home.
- You are working with an agent who knows the neighborhoods, shares your motivation, can get you into homes immediately when they hit the market and is experienced in writing and negotiating purchase offers that get accepted and closed.
Five Reasons To Buy an Ann Arbor Area Home Now:
Sellers are motivated
A seller putting their home on the market has likely already moved or is committed to moving.
Let’s face it: summer is the easiest time to move, kids are out of school, and the weather is favorable. However, good homes hit the market year-round as people relocate for the same reasons as always – a job relocation, to be near family, or a change in family size or income, for example. Buyers shopping now will find motivated sellers who want to sell now to avoid carrying an empty house over the winter months.
There are fewer home buyers in the market in the fall and winter.
Generally, buyer activity falls after the 4th of July and then again after Labor Day. Many buyers who can wait to move put their search on hold and leave the market. Others who actively want to buy take their eye off the market, which is one less buyer you have to compete with. When making an offer, you may likely find fewer multiple offers and the ability to negotiate inspections and other contract items more quickly.
Timing the market is nearly impossible.
Experts cannot get it right on predictions for inflation, mortgage rates, or the stock market. Predicting future housing prices and mortgage rates is nearly impossible. If we look at historical long-term trends, single-family homes average around 4 percent annual appreciation, and mortgage interest rates run about 7 percent on average. Given that the primary conditions are in place, there is no advantage to waiting and anticipating a market change. While many people predicted a flat or falling real estate market in Ann Arbor for 2023, prices year to date are up 6.3 percent on average.
The Right Property hits the market.
If you are looking for a unicorn property and it hits the market, now is the time to buy it! This means you must stay focused on new listings hitting the market and maintain an updated financial readiness should the right property hit. Keep your mortgage pre-approval updated and stay abreast of changing prices and interest rates. The market could be quite different if you have been away for several months.
Waiting could price you out of the market.
Many buyers decided to wait for prices to come down back in 2019, 2020, and 2021, only to see prices accelerate and then watch interest rates double. Generally speaking, buyers who can buy and have a longer time horizon, five years or more, would be well served by buying rather than continuing to rent, even if it means looking at less expensive properties and different neighborhoods. A low inventory of homes for sale will likely keep upward pressure on prices for the next several years.
5 Reaspms To Wait Until 2024 and Beyond To Buy An Ann Arbor Home.
I Don’t Have All The Basics In Place to Purchase A Home.
This is a challenging market. Ensure you have the basics – relatively good job security and savings, awareness of home ownership costs, cash on hand, and a high motivation to act quickly when the right house hits the market.
I Now Can’t Afford The Houses I Saw For Sale Last Year.
Home affordability has deteriorated due to inflation, rising interest rates, and historic low home supply. For these same reasons, supply will likely remain low for several years, putting upward pressure on home prices. You have two options – 1. find homes and neighborhoods that work for you with lower prices. You will be surprised, but with time, you can likely find some excellent alternatives that offer what you need in a home and neighborhood. 2. Save, Save, Save. Take drastic action to save money to put toward your home. Check on downpayment grant programs you may qualify for and stay in action toward your goal of getting into a home.
There Are Few Good Homes For Sale On The Market.
We presently have a record low number of new homes for sale listings. However, good homes do hit the market…1 at a time. Motivated buyers in the market are finding homes. If you are motivated to find a home, teaming up with a focused agent to dig out homes and neighborhoods will keep you ready when the right home does hit the market,
I’ll Wait For Mortgage Interest Rates to Come Down.
If you have been priced out of an area but do not want to look for other, more affordable options, then waiting could make sense. Use this time to aggressively save (or otherwise come up with more cash) and wait for interest rates and prices to come down. But remember, if interest rates come down, buyer demand will likely increase, getting us back into multiple offers over asking price territory again. If you can afford to buy at the current interest rates, check with your lender for a streamlined refi option to cheaply refinance your home and lower your rates when they fall again.
I’ll Continue To Rent
Renting could be your best option, especially if you have a generous landlord who is slow to raise the rent! Just know one day, that could change. Many long-term landlords have been selling either due to retirement or prices reaching an acceptable level. Renting may make sense for your lifestyle. If you are financially secure, remember that real estate is a great way to diversify your portfolio, allowing an asset that you also live in! Revisit the basics and decide if buying real estate is right for you.
If you are considering buying or selling a home in the upcoming year, please call for a no-obligation call. I am here to help with any Ann Arbor Real Estate questions or needs.