I can’t say if right now is the right time for you to buy a home or not, but I do know this: if you wait for the “perfect” time to buy you’ll never buy a home.
That’s because all kinds of factors could always be more perfect than they are at any given moment. The market will eventually flip from seller’s to buyer’s advantage. Inventory can improve, offering a greater selection of homes available for sale. But those changes can take years. Your earnings and/or credit score might improve. You could be more stable in your employment or save more down payment funds. But isn’t that always the case? Home prices and mortgage interest rates might go down… if you’re willing to wait long enough.
The truth is that there are so many variables that there may be no such thing as the “perfect” time to buy a home. If you wait for the elusive “perfect time,” you may just miss out altogether.
However, while there may never be a “perfect” time to buy, some factors suggest that now might be a great time to buy a home in America. For example:
Employment, wages and the U.S. economy are on the rise:
- Bloomberg recently reported: “U.S. hiring rose more than forecast in May, wages picked up and the unemployment rate matched the lowest in almost five decades, indicating the strong labor market will keep powering economic growth… Average hourly earnings increased 2.7 percent from a year earlier, more than projected, while the jobless rate fell to 3.8 percent from 3.9 percent to match April 2000 as the lowest since 1969.”
- The Wall Street Journal recently reported: “The number of small companies raising wages hit a record high in the U.S. this month. According to the latest National Federation of Independent Business employment survey, ‘A full 35% of owners of small firms report increasing labor compensation, the highest percentage since NFIB started asking about it in 1986.’”
- According to a new survey from the National Association of Manufacturers (NAM): seventy-two percent of surveyed manufacturers are ramping up workers’ wages and benefits, and 77 percent of survey respondents said they were hiring more workers, while 86 percent are investing more in plants and equipment.
- According to the Washington Examiner: “Employers advertised 6.6 million job openings in March, the Department of Labor reported…the highest such number since they began keeping track in 2000.”
Consumer confidence is high:
- According to recent findings by Gallup: “Sixty-seven percent of Americans believe that now is a good time to find a quality job in the U.S., the highest percentage in 17 years of Gallup polling. Optimism about the availability of good jobs has grown by 25 percentage points” since November 2016.
- Marketwatch recently reported: “The level of confidence Americans expressed in the economy remained near an 18-year high in May, suggesting steady U.S. growth in the months ahead.”
- According to the Associated Press: “Americans boosted their spending by 0.6 percent in April, the biggest increase in five months.”
- Reuters recently reported: “Households are feeling more stable, small businesses are making money and many expect to expand and hire in the coming year, signs of continued optimism in two key parts of the economy, the Federal Reserve reported Tuesday in a pair of annual surveys. Among more than 8,000 small businesses and more than 12,000 households covered in separate surveys late last year by the Fed and its 12 regional banks, the message was similar: economic conditions have been getting better and the expectation is for the good times to continue.”
- A recent Quinnipiac poll found that two thirds of respondents say the economy is “excellent or good,” (that’s up from 46 percent who felt similarly prior to January 2017).
- According to the CNBC All-America Economic Survey, 54 percent of Americans say the economy is “good” or “excellent” — the highest recorded in the poll’s 10-year history.
Does a soaring American economy make it the “perfect” time to buy a home? No. One could point out that mortgage rates reached a seven-year high of 4.77 percent in late May, before declining again in June. But the truth is that 4.77 percent is still a very good rate in the big picture. From 2011 back to 1971, the rate was always higher than 5.05 percent, with a high in 1981 of 18.63 percent!
Does record-setting consumer confidence make it the “perfect” time to buy? No. The recent S&P CoreLogic Case-Shiller 20-city home price index (which covers roughly half of U.S. homes) reported that nationwide home prices moved up 6.6 percent from a year earlier, and predicted prices will continue to increase at a rate of 4.3 percent over the next year.
So no, it’s not a “perfect” time to buy a home. But that shouldn’t deter you if you’re ready, because there’s no such thing as a perfect time to buy.
The “bottom” in home prices and interest rates has already come and gone. Home values and interest rates will likely continue to climb over time (as will rental rates), so waiting no longer makes sense, unless you’re prepared to wait for a long time.
A sage business adage says: “Don’t let the perfect be the enemy of the good.” Similarly, Confucius said: “Better a diamond with a flaw than a pebble without.”
In other words, when it comes to buying a home, don’t let the “perfect” time be the enemy of this “great” time to buy.