Did You Miss The Boat on Buying a Home?January 19, 2017

Over the weekend a good friend asked me if I would buy right now, knowing what I do about the market.  He currently owns his home and has plenty of equity he could use as a down payment on a bigger home.  His concern, like many others in the market right now, was that homes are more expensive these days.

I always tell clients the right time to buy is when it’s the right time for you, your finances and your family.  But, he wasn’t going to take that as an answer.  He was looking for my “real” opinion.  My typical response still applies; I would never lie to anyone asking my advice – client or friend.  It got me thinking though, since this question seems to coming up more and more.

Based on the strengthening economy and growth here in Nevada, home prices should continue to drift higher.  There is always an ebb and flow to that due to factors like seasonality but the trend is consistent and clear: values are gradually increasing.  If a buyer is now ready to enter the housing market for the first time because they have a stable career, have had some time to build up savings and are ready to grow roots here in Reno…they might be looking at prices compared to the recession and feeling like they missed the boat.  I would like to stop to point out here that given that the recession began in 2006, said buyer was likely in college.  By the time the housing market was hitting rock bottom, they were just landing their first crappy paying job and likely had a lot more debt to talk about than down payment savings.  So missing rock bottom record low house prices a few years ago sucks, but you have to set that aside and come up with the best strategy for you now – given your current finances and today’s pricing.

late-filing

What about waiting for another bottom to fall out on the housing market? Here’s why that’s most likely not going to work.  Everyone who has gotten a loan in recent years has had to be thoroughly vetted for that mortgage.  It was a full document file and they had to be well qualified in order to get approved.  So the loan quality has never been higher.  That means we aren’t likely to see a huge wave of homeowners defaulting in mass like they did in 2007-2009, driving home values down.

If we know the price on a home will be higher a year from now than it is today, it doesn’t make sense to wait for a price drop that we don’t have any reason to believe is coming.  Specifically here in Northern Nevada, given our local growth and the new companies moving here – I am confident that our home values will increase at a healthy pace in the coming years.  It’s hard to get the timing 100% right, but if you want to own a home then it would not serve you well to wait for prices that have drifted further and further away for the past 6 years.