Whether you want to purchase a property to live in, rent, or flip, becoming a homeowner is always a big decision. Should you buy a house in 2021, or is it better to wait for some more stable times?
It is never easy to pick the right time to buy a house. In a market as crazy as it is today, this decision is even tougher than usually. So, is it a good idea to buy a house in 2021, or should you wait a while? Here is what you should know before you set yourself up for such a financial transaction.
While mortgage rates are predicted to rise, they are still assumed to stay near historical lows. In January 2021, interest rate for a 15-year fixed mortgage was 2.36%, while the rate for a 30-year fixed one was 2.88%. This is still near historical lows, and it’s under 3%. While the rates are supposed to hit 3.2%, this is still very low considering years before the Covid-19 pandemic. If you plan on snatching those affordable interest rates, then you should buy a house in 2021.
In most states, housing inventory is still very low. This usually means higher home prices and less chances of finding a perfect home. All of this may have a negative impact on your desire to buy a house in 2021. Luckily though, Wisconsin is still having an active housing market that is even leaning towards what is called a buyer’s market. This means that buyers still have an upper hand and negotiating power. If you’re lucky, you may even find a home at a much more affordable price than you usually would. Even if you don’t and the house is a bit more expensive than you expected, due to low mortgage rates, this will still pay off in the long run.
Of course, in the age of recession, it all boils down to finances. What is your employment and is it stable enough? Do you have enough income and did you save enough for a down payment? This is especially crucial if you’re looking for a new home to live in. If your cash reserves can’t support the closing costs, then you’re in trouble. Also, are you prepared to risk getting a house that may not be entirely up to your standards, considering the low supply? If you’re in urgent need to move, you may have to settle for less quality than you hoped to get.
If you’re thinking about buying an investment property in Milwaukee, however, this might be a great time to make a purchase. With unemployment rate rising, many people are looking for affordable rentals, especially in the suburbs. You will likely profit if you by one now. Not to mention that, with lower mortgage rates, you may even be able to add a premium unit to your investing portfolio. Finally, house prices are expected to rise in the next few years, so this can be a great investment in the long run.
Of course, as the time passes, the inventory could become bigger which will cause the prices to drop. This may be the reason why you might want to wait if you’re looking for a house to live in. Waiting a few more months to a year may not be such a bad choice, especially if you don’t have enough cash for a down payment – even though there is a way to solve that. However, as the time passes, interest rates will rise, which may prove to be costly in the long run.
If you’re a strong borrower with a low debt-to-income ratio and a good credit score, then the small expected rise in interest rates shouldn’t concern you. Since you will get an attractive rate, you’ll still have to pay a very small amount in interest no matter this rise.
So, Should You Buy a House in 2021?
No matter the reason behind a house purchase, this is a sloppy road to ride on. The market conditions have their ups and downs and it all depends on your preferences. If you have a steady income, a secure job position, and a good amount of cash in savings, then this is the perfect moment to grab those low interest rates and lose much less once the debt is paid. However, if you fear you may lose your job or if you have to borrow money for a down payment and get into even more debt, then perhaps it would be smarter to wait. Milwaukee housing inventory will rise shortly, and the interest rates will still remain low, at least until the late 2021. It is up to you and your own desires and possibilities to think about what might work the best for you and your case.