This week we partnered with Fairway Independent Mortgage in Knoxville, TN to answer the question “How do I make an excellent buying decision in this market?”
Branch Manager, Corey Freels shares his opinion with us:
According to a recent Gallup poll , only 30% of Americans believe it’s a “good time” to buy a home, while 69% of Americans believe it’s a “bad time”. What’s perhaps more interesting is 7 in 10 Americans believe home prices will rise in their local areas… and as a whole, Americans believe real estate is the best long-term investment.
If 70% of us believe prices will continue to rise, and as a whole we believe housing to be the best long-term investment, then why do we also believe it’s a bad time to buy?
Does something feel amiss here to you, too?
Well, if you work in the real estate industry OR you’ve waded into the treacherous waters of homebuying over the past two years, this might not surprise you all that much. Interest rates are at their highest level in 13 years.
So, why in the world would we dip our toe into the housing market right now??
What was my greatest fear during the last two years of cheap mortgage rates, crippling supply, and a buying frenzy? It was that we were subsequently pricing an entire generation (or more) out of owning their own home.
I could write an entire article on the importance of the housing industry to the entire American economy, and its impact on net worth and social mobility. Perhaps I will, but for now take my word for it: it’s crucial, non-negotiable, essential.
You can make a great long-term buying decision in this market, and those that do will have taken advantage of what might be a generational buying opportunity.
Housing is a basic human need (food, shelter, water) and there is no alternative. You will participate in the housing market one way or another. You can pay your own mortgage or cover your landlord’s. The choice is yours.
Whether or not you should buy a home, trade up, or sell your current home is far more about you individually than it is about market conditions.
What volatile markets ARE good for, however, is making us stop and think so that we make a really good decision. This is something we should be doing all of the time.
Five Steps to Making an Excellent Buying Decision
- Know your numbers – know what monthly payment you are comfortable with, how much cash you will need at closing, and how much you will have left over for a rainy day. This is impossible without first meeting with a trusted mortgage advisor. Put a lot of work and thought into this; it’s important. When you get comfortable with these numbers, do not waver.
- Manage your expectations – this is a deep concept, and you need a trusted real estate agent to walk you through it. Maybe the home that was personally decorated by Joanna Gaines and has a pool with a waterfall in the back yard is out of reach, and that’s okay. Think long term, which brings us to the next point.
- Think LONG term – some advice I got early on that has stuck and holds true: don’t buy a home you couldn’t OWN for 10 years. And I’m not talking about utopia here, I mean worse case, the world falls apart, will this house work for 10 years?
- Fear scape – this is something you won’t read often as given advice. Let your mind play out your fears. A job loss, an illness, the market turns, etc. Let your mind chase down those scenarios to their end, and then realistically see how prepared you are for those scenarios. You’ll often find that the worst case isn’t all that bad, and that you could make things work. And then, LET IT GO.
- LET IT GO – there, we’ve given our mind time to be afraid, to think this through. Now, we make decision on what we KNOW. We know WHY we want our own home. We know WHAT we’re looking for. We also know WHAT we can afford. Now, you’re ready.
With the right counsel in a great mortgage lender and a great agent, you can absolutely make a great buying decision in this market. And this market, unlike the past two years, will present opportunities for the majority of buyers who were left out of the frenzy.
For two years, buyers with seemingly unlimited resources have dominated the market. Now, they’re either all bought out or they’re afraid. It’s your opportunity to participate in one of the greatest wealth building vehicles available to everyone.
Feeling some fear about buying a home is completely normal. I know I did. But letting fear prevent you from making a wise decision is not productive, and we need to let logic lead us to the right conclusions.
Fortune favors the bold, and this market will prove to be opportune for those that are bold.