When Is The Right Time To Buy?
If you are planning on timing the market you may be missing out on quality opportunities today and the only way real estate will work in your favor is if you own it. Time is an important factor if real estate is going to benefit you in the long run. Timing the market almost never works. Gary Keller wrote in his book Shift,
Buyers who choose to wait “until prices come down more” are also gambling that interest rates will hold steady or drop. What is not widely understood is the impact interest rates can have on the real monthly costs of home ownership. Even a 10 % drop in home prices is immediately nullified by a mere 1 percentage point increase in interest rates on a 30 year mortgage loan. By the way, this relationship between interest rates and home pricing remains essentially the same at any price point.
Should You Rent or Buy?
According to Trulia, “Homeownership continues to be the cheaper option in 98 of 100 largest U.S. metros.” They used a 3.85% mortgage rate on 30 year fixed-rate loan for comparisons. Trulia found that “buying is …23% cheaper than renting nationally.” However, remember that New Hampshire has high real estate taxes generally, which can skew the numbers. Zillow has a great tool that you can play around with to see how it might look for you with this calculator.
According to Pulsenomics, historically 25% of income is needed to afford rent compared that to the 30.1% that is needed today. Further 22% of income historically is needed to afford the average home compared to the current 15.3%. So if you are renting chances are very good that you Can Afford a home! You are going to be paying a mortgage either way so why not have it go into your pocket. Your future self will thank you.
Of coarse there are other factors to consider, like how long you plan to be in the home and how much money you have saved.