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Wondering When to Buy a Home? Fannie Mae’s Survey Says Now!

Buying a home is, for the vast majority of people, the most expensive purchase of their lives. That is true today just as it was 50 or even 100 years ago. In the overall American real estate market, prices are remaining high, although they appear to be stabilizing. While high prices may keep some buyers away, there are a few indicators that the time is right to purchase.

Interest rates, one of the most discussed factors for when buying a home, are currently low. Combined with a hearty and vibrant national economy, more buyers are eligible for a home.

Although there are positive signs, many are worried that they still can’t afford the home they want. However, prices could rise sharply in the future, meaning now may be the perfect time to buy.

According to the latest survey conducted by Fannie Mae, more Americans are inclined to purchase a home right now. With home prices likely to rise, and the potential for rate cuts from the federal government, it could actually be the perfect time to purchase.

Now is the Time to Buy, According to Expectations and Prices

Home Purchase Sentiment Index (HPSI) in Review

First of all, we need to understand the source of this information. Every month, Fannie Mae conducts a nationwide telephone survey, polling 1,000 consumers and asking questions about owning and renting a home, expected price changes, household finances, the economy, and overall consumer confidence. Out of 100 total questions, six are part of the Home Purchase Sentiment Index, or “HPSI.” This portion of the survey is intended to provide signals about where the housing market sits and where it may go in the future.

The HPSI is compiled using six different topics. They survey respondents on their impressions of the market, asking whether they feel it is a good time to buy, as well as their thought on whether it’s a good time to sell. They ask about the near future, including expectations of home prices and interest rates over the next 12 years. One of the questions even asks respondents whether they are concerned about their job security, and another asks about their current income compared to past incomes. With these questions, the researchers are able to get an overall depiction about people’s expectations for home buying and real estate transactions. 

Positive Outlook from Potential Homebuyers

According to the latest survey information, people appear to be feeling positive about the overall housing market. In general, it seems people feel good about buying a home.

For example, the overall HPSI score increased 3.7 points from April to May, increasing to 92.0. This score is just shy of the overall high that was reached in May of the previous year. Out of every ten consumers surveyed, six (60%) said is was a good time to buy, which is up 6 points from the previous month. Interestingly, only 41% of respondents believed home prices will increase; this number, however, represents a 5 point raise. People are also increasingly positive about interest rates; the amount of people who believe interest rates will decrease rose by 3%, further suggesting confidence in the overall real estate market.

Compiled together, all of these data points suggest that more people think it’s a good time to buy. This is, in fact, reflected in the comparable numbers.

What these Numbers Tell Us

Increases in employment has created more potential homebuyers.

So what does all of this mean? Currently, the HSPI is going up, which reflects a few different factors, starting with unemployment, which has been in steady decline for years. Alongside this increase in employment, wages are increasing as well. This means that more people have money to spend on a home, which creates a larger collection of available buyers. If the economy continues its upward trend, more buyers could mean greater competition, which will eventually push home prices even further, as buyer seek to outbid each other for desirable locations and houses.

Another important component is the interest rate. Interest rates are actually falling, which is unique during an economic boom. Personal factors, including job security, income, and debt load, are certainly important to individual buyers, but a lower interest rate gives everyone better incentives to buy.

Although there may be more buyers, inventory is remaining relatively high, balancing the timeless economic principle of supply and demand. It’s best to purchase when inventory is high, as sellers are more willing to negotiate if they are competing with dozens, hundreds, or even thousands of other sellers.

An Odd Time to be the Right Time

Right now we have almost all the factors that make it a good time to buy, which is somewhat strange. Generally, the strongest indicators of a good time to buy is low interest rates. In most cases, this factor comes when the economy is struggling, but we are seeing low rates at a time when the industry is booming, employment is strong, and even wages are starting to climb.

The Most Important Question: Is the Timing Right For You

Overall, the major factors indicate that is could be a good time to purchase a home, but this does not necessarily mean it’s a good time for you. Above all, you need to enter into the market when you are ready, which means having a manageable debt load, a bit of savings, and a stable income.

Yes, current economic conditions may pressure you to buy, but it may be wise to wait until you are personally ready. Talk with an experienced lending agent or real estate professional and discuss whether the time is right for you to buy.

Deciding When to Buy a Home? Explore Your Loan Options Today

Have you decided when to buy a home? If you are thinking the time may be right for you and your family, contact the staff at San Diego Purchase Loans today. No matter what the current market conditions, we’ll help you get the right loan for your exact needs, budget, and preferences, and we’ll explain everything in language that helps you make a confident choice!