There are endless 'what if' scenarios in the real estate market and we hear a lot of them from buyers and sellers, says Amit Arora, vice president of investments at real estate website Opendoor. All of them make complete sense because buying and selling a home is one of the biggest financial decisions people make in their lives.
What if I buy a home now and prices fall?
According to a recent survey of home buyers and sellers conducted by Opendoor, 93 per cent of home buyers believe that homes on the market are currently overpriced, and 72 per cent of home buyers ranked home affordability as their top concern.
As a result, Arora believes that some homebuyers are watching to see if home prices will fall further in order to find a "deal." But that could be a mistake, as inventory is still in short supply and homes are actually selling faster in 2023 than they did in 2019. In addition, home prices are still rising in many areas.
What if I buy a home now and mortgage rates fall?
In Opendoor's survey, 77% of respondents - both buyers and sellers - ranked today's high mortgage rates as the top current real estate concern.
Interestingly, however, while current mortgage rates may seem excessive, this is likely simply because people were used to record low rates in the first few years of the COVID-19 pandemic.
The average mortgage rate over the last 30 years has been about 7 per cent," says Rundlett. So while rates currently hovering around 7% may seem very high compared to rates of 3% to 4% [in 2022], people need to understand that this is not an unusually high rate."
The Federal Reserve implemented a policy to keep interest rates artificially low in response to the 2007-08 financial crisis, but Rundlett predicts that we may not see rates this low again for a long time.
What if I don't buy now, but house prices and interest rates continue to rise?
In fact, according to the July 2022 Anytime Estimate Homebuyer Survey, nearly 72% of people who purchased a home in 2021 or 2022 regret their purchase. Nearly 30 percent of them said they spent too much money, and 26 percent wished they hadn't bought so quickly.
Hale said, "I don't think the fear of missing out on the opportunity to buy a home is a good reason to rush into buying a home that doesn't fit your needs or budget." A lot can change in the housing market and in your life. A new career opportunity may change your income trajectory, or a move to a more affordable area may make buying a home possible.
What if there are hidden problems with the property that need to be fixed at great expense?
More than half of buyers (55%) surveyed by Anytime Estimate said they had purchased fixer-upper properties in 2021 or 2022 that didn't end up living up to their expectations, or didn't live up to their expectations at all.
In fact, buyers of fixer-uppers spent more money than the average buyer. A fixer-upper costs $187 per square foot, while a home in good condition costs $163 per square foot. What's more, the average additional annual cost of owning a home is $15,405 for maintenance and other expenses.
What if I buy a home and then lose my job or experience a financial setback?
This is a very real scenario that people have experienced in recent years. To allay this concern, when you're thinking about buying a home, you don't want to be in a worst-case scenario where you can't keep your home because you're short on cash. A good rule of thumb is to set aside at least 6 months of living expenses in case of an unexpected financial setback.
What should you do if you've already bought a home and suddenly can't afford the mortgage?
Haynes advises, "If you can't make your mortgage payments, contact your mortgage lender to see if you can work out a payment plan." If you are honest with your lender, they will usually work with you because the last thing they want is a foreclosure.
