The 4 Home Buying Myths Doing More Harm Than Good
There’s so much chatter right now about the real estate market and interest rates. Everyone is still reeling from skyrocketing housing prices and historically low interest rates of last year, so there’s a lot of advice circling about what you should be doing.
Unfortunately, a lot of that speculation can come from unreliable sources, like your cousin that has invested in 3 different pyramid schemes or your boss who bought their house for $20k in 2009.
I am all for discourse and sharing ideas, but some advice is best left to the experts. Here is some of the worst advise I hear all the time, and the reality of the situation:
1. Wait for a Market Crash to Buy
I’m going to be very clear about this - if you don’t have enough for a down payment now, you likely won’t have enough to buy a house if the market crashes. When the market crashed in 2008, it was next to impossible to get a loan with good terms and a decent interest rate, if you could get one at all. Everyone that was buying houses had cash in hand and was doing so at auction.
In the last 50 years there have been 7 major recessions. Only one of those included a housing crash. Housing prices will usually dip with a receding economy, but the trend we have seen over time is that housing prices continue to increase. If you’re waiting for the market to crash again, you might be paying rent for another 50 years.
2. Wait Until Rates Come Back Down
I know I’m not the only one still reeling from the sudden spike in interest rates in the last year. We all became used to near-zero rates for years was a boon on the housing market, creating high inventory and lots of demand, so this rate hike feels like it has to be a fluke. Right?
The low rates were historic, meaning we’ve never seen rates like that before and we may never see them again. This doesn’t mean they’ll never come down, but seeing a 2.65% is difficult to imagine. If you’ve ever heard the old adage “Marry the house; date the rate,” now is one of the best times to listen to it. I hope I am wrong, and that rates will drop again soon.
3. Offer Low to Negotiate Up
I am currently writing this from the San Francisco Bay Area, which is no longer the most expensive or competitive housing market in the United States. Many major metropolitan areas around the country have caught up to our prices with the same issues that we are having here - low inventory and high demand.
Prices may have dropped since the peak of the pandemic, but many desirable areas are still being sold above asking price because the demand for housing is still so high. You will not be the only person offering to purchase a move-in ready home. Offer what you are willing to pay, and leave negotiations for after your offer has been accepted.
4. Save Money by Skipping an Agent
There is no laws in California (where I am licensed) to work with an agent in order to buy a house. There is also no requirement to work with a tax professional when filing taxes, a lawyer when representing yourself in court, a personal trainer when working toward fitness goals, or a physical therapist when healing from an injury. You will absolutely save money on their fees, but how likely are you to save on long term costs?
When you work with a professional, you are paying for their experience and expertise. What looks effortless is the result of countless hours perfecting a craft. A good agent knows the area, knows regulations, can help guide and advise you, and will go to bat for you during the entire purchasing process.
Every Life Is Different
There are countless reasons not to buy a house, or simply to wait. Life circumstances are important and should never be put on hold to buy a home in a panic. Even just not being ready to buy is reason enough. The truth is that the market and interest rates are always fluctuating and always changing, and trying to time the market can be a heart breaking game. The best time to buy is always when it is right for you, not when someone with five videos on Youtube says it is.
