Is 2013 a Good Time to Buy a House?

After the housing downturn and general economic slump of the last few years, during which housing prices plummeted and lenders tightened their requirements to qualify for a mortgage loan, the market is starting to show some healthy signs of recovery. This means a steady rise in home prices, but fortunately, interest rates are still quite favorable. So, is 2013 a good time to buy a new home?

Currently, inventory on the market is scarce and there just aren’t enough homes out there to meet customer demand. It’s a competitive market for buyers right now, and finding just the right home could take a little longer. But that isn’t to say that you shouldn’t be looking.  New listings can go on the market any day, so if you are thinking about buying, continue to keep an eye out for the types of homes that meet your needs.

It’s important to note that interest rates are still low – but they may not stay as low as they are now forever. In fact, they have already begun to rise over the past few months. As the housing market continues to recover, the government is bound to further raise the interest rates. Although no one can predict exactly what interest rates will look like in a year or even a few months, by locking in a good rate now, you could end up in a much better position in terms of mortgage payments than you might be if you wait to buy.

One rule of thumb for first-time homebuyers is that it makes sense to buy a home when it costs less to buy than to rent. By running the numbers, first-time buyers can make an assessment of whether a home investment is the right choice. Taking into consideration savings, housing prices, and interest rates, buyers should be able to calculate the size of the home loan they will qualify for and an estimate of their monthly payments. If this number is lower than current monthly rent payments – and particularly for those saving up for a down payment while waiting to buy – it’s a good time start the search for a new home, particularly because it might take a little longer right now to find one.

With the housing market and economy in general trending in a slow-but-steady upward direction, homebuyers who plan to stay in a home for a number of years should be in good shape to consider buying now. Although the market is unlikely to see the type of astronomical rise in prices that occurred before the sharp drop in home values several years ago, in the long term, values should rise steadily if not quickly in a return to “normalcy” and home investments will once again be worthwhile.

If you are thinking of buying a home this year, talk to a lender about getting pre-approved for a loan so that there is no guesswork involved when it comes time to make an offer. Lenders are much more cautious in the wake of the lending frenzy that ultimately led to the drop in home prices. However, financially responsible borrowers with good credit are still great candidates for a mortgage loan.

Talking to a real estate agent at the outset of your home buying journey is the best way to get a sense of the market in your area, including an idea of what available inventory looks like and which homes might be a fit for your finances and lifestyle. Since real estate markets vary by location, there is no “one-size-fits-all” answer to how competitive the current market is for buyers in your area. Your agent has the experience and knowledge to help you determine the local real estate climate and to set expectations about how long it might take for you to find that dream home. With his or her guidance, you should be in a good position to think about buying a new home in 2013.