If you’re thinking about upgrading your home, the best time is just around the corner. Despite high mortgage rates, the strong stock market and robust job market are signs that it might be wise to make your move soon. When mortgage rates eventually drop, expect home prices to react positively. So, while you’re house hunting for that perfect upgrade, it’s smart to save up and strengthen your financial buffer.
It’s really an opportune time for those looking to buy a better home. Home supply has been steady, albeit lower than pre-pandemic levels, while demand has started to dip since early 2022 due to rising mortgage rates.
For anyone with solid financial backing and ample savings, this market could work to your advantage. Not only are nicer homes becoming more affordable, but your cash savings are also earning more, thanks to interest rate hikes. Plus, if you’ve gained from the stock market’s performance, it’s a good time to consider turning those virtual gains into tangible assets like real estate.
From a personal perspective, I’m always on the lookout for a better home, aiming to provide the best for my two young children. The goal is to secure the best living situation before they grow up and head out for college, as upgrading to an even bigger home afterward might not make sense.
Back in 2020, I moved up the property ladder during the national lockdown, which was quite daunting. But unlike then, the fading bidding wars now make it a more straightforward decision to upgrade.
Historically, the best time to buy a home is typically in the second or third year of a real estate downturn. Real estate usually cycles through seven to ten years of rising prices followed by one to three years of decline. Therefore, buying about 18 months after the peak—once it’s clearer when the peak occurred—could be ideal.
As for the current situation, home prices peaked around April 2022, and although they’re still higher year-over-year, they’ve begun to decline due to aggressive interest rate hikes by the Fed. If the Fed eases up by the end of this year, we might see a resurgence in home buying demand.
If you bought a home recently, don’t worry too much. Holding onto it for five to ten years should see you through any temporary dips in the market.
Looking ahead, the best window to buy will likely stretch from June 2023 through to March 2024. This period aligns with seasonal slowdowns in summer and winter when fewer people are looking to move due to holidays and travel plans, potentially leading to better deals.
In the realm of higher-priced homes, these properties typically see larger absolute dollar declines during a downturn. For those looking to upgrade, this market behavior works in your favor as it can lead to significant savings on pricier homes, even if your current home loses value as well.
In summary, if you have the financial stability and are in a position to upgrade, the coming months could present a strategic opportunity to invest in a property that not only meets your needs but also aligns with your financial goals for the future.
