Main Content

October 2022

Is the Fall of 2022 a good time to buy?

In the current economic climate of continued high inflation, increasing interest rates, and recession fears, many buyers are wondering if this fall is a good time to buy. Another concern for prospective buyers is the that the value of their down payment is being eroded by inflation, further increasing the challenge of buying.

A recent article in the Wall Street Journal outlines the pros and cons of buying now or waiting:

As Home Prices and Mortgage Rates Stay High, Prospective Buyers Put Down Payments on Ice

If you have a pile of cash and you want a home, waiting is one strategy. Continued rate increases from the Federal Reserve should eventually translate to higher returns on your savings account. But holding off isn’t without risks, financial planners say. It may take years for mortgage rates to come back down. Home prices are still rising on a year-over-year basis, even though the pace of that price growth has slowed.

Taking the plunge and buying anyway is another approach.If you can still afford the estimated monthly mortgage payment despite higher rates, while maintaining a total debt-to-income ratio less than 36%, it might make sense to buy, said Sara Kalsman, a financial planner at Betterment.

John Boyd tells clients not to wait to buy if they can still save, pay their bills and plan on staying in the home for at least five years. They can aim to refinance their mortgage later to a lower interest rate, said Mr. Boyd, a financial planner in Scottsdale, Ariz. “You can’t time the housing market any better than you can time the stock market”, he said.

Our Perspective

The ownership of real estate is a long term investment that has many advantages over renting. Among them are the building of equity through appreciation and mortgage principal pay down, protection from inflation by locking in a fixed monthly payment, the income tax deduction, and the many emotional benefits of owning your own home. Many consumers sat out the real estate recession of 2008 -2010 by waiting for the bottom. The real estate market rapidly recovered from the recession and many of these consumers are either still renting or bought at a higher price later. Market conditions in the fall of 2022 are more favorable to buyers than in the spring and summer.

There is now the opportunity to buy with less chances of being involved in bidding wars. Buyers are also more likely to be able to make offers with home inspection and mortgage contingencies.

Skip to content