Now is a great time for many people to buy a home. For some, not so much. Learn more about the pros and cons of Texas’ real estate market in 2021.
Is now a good time to buy a home? For many people, the answer to that question is “absolutely, yes.” Some people, however, might be better off waiting until next year. Ultimately, this is a personal decision for each individual or family, but buying a home in 2021 presents several potential advantages over putting it off until 2022.
An experienced mortgage lender can help you understand all of your options and the factors that weigh for or against moving forward now. No one can predict the future, of course, so we can’t tell you what’ll happen with home prices or mortgage interest rates next year, next week, or even tomorrow. We can tell you about the trends that we and other real estate experts are seeing, so you can make an informed decision for yourself.
Why you should buy a home in 2021
The real estate market is booming in many parts of Texas right now, especially in most Texas cities. This is due to many factors, including low mortgage interest rates and increased interest in moving sparked by the coronavirus pandemic. Many people are looking to sell their homes, and many more are looking to buy.
You might be in a good position to buy a new home this year if you meet some or all of the following criteria:
You can afford to pay more than the asking price for a house, if necessary. Bidding wars are commonplace in 2021.
You have a good credit score and a low debt-to-income (DTI) ratio, and you meet other criteria that will help you qualify for a mortgage.
You either live in an area of Texas where home prices have not risen as much as in other areas, or you are willing to move to an area that is less in-demand.
Working from home allows you flexibility in where you live.
You are part of a growing family and therefore need more space, but do not need to be in a high-demand area of a city.
Buying a home costs money, obviously, but it can also yield significant financial benefits over time. People who have the ability to make this investment now can benefit from some current features of the real estate market in Texas.
Low mortgage interest rates
Mortgage interest rates have hit historic lows over the past twelve to eighteen months. In the spring of 2021, the average interest rate for 30-year mortgages dropped below 3%. They had averaged more than four percent less than two years earlier.
This means that now is an excellent time to lock in a 15- or 30-year mortgage with a low fixed interest rate. Most real estate industry experts think that mortgage interest rates are going to start going back up soon. This could happen within a month or two, or it could happen next year. Either way, it seems likely that a window of opportunity is closing.
Rising home prices, greater equity
There’s no clear indication that home prices won’t continue to rise. If you buy now, the value of your home is likely to rise, giving you quick equity. The more equity you have in your home, the more money you will make when you sell.
This is especially true in the cities. Data from the federal government show that home prices increased by 19.2% nationwide between July 2020 and July 2021, and by 17.7% during that time in the region that includes Texas, Oklahoma, Arkansas, and Louisiana. The rate of increase for the corresponding period between 2019 and 2020 was 6.9% for the country and 5.6% for Texas and surrounding states.
Some people believe that home prices will start to go down in the near future, but this is far from a universal view. In the Dallas/Fort Worth area, for example, forecasts stating that the real estate market has peaked are quickly followed by predictions of continued price growth. In the Austin area, some real estate experts believe the real estate boom will be around for longer.
Numerous mortgage options
If you want to buy a house now, but worry about your financial ability to do so, you have many options when it comes to mortgages. Many mortgage products offer relatively low down payments, which allow you to take advantage of the low mortgage interest rates mentioned earlier without having to wait to save twenty percent of the purchase price.
» READ MORE: Check Out the Full Suite of Mortgage Options
Why you (maybe) shouldn’t buy a home until 2022
Despite the many reasons why buying a home now is a good idea, some people might be better served by waiting a while. Reasons for waiting might include:
Nothing currently on the market fits what you need in a house.
Your credit score, DTI ratio, and other factors prevent you from qualifying for a mortgage with a good interest rate.
Bidding wars over available properties cause prices to exceed what you are able to afford.
Your family isn’t itching for more space just yet, and you’d like to wait and see if prices will come down in the near future.
You might simply prefer to wait for home prices to come down before buying a home. Just know that this might not happen any time soon in many parts of the state and country. But most real estate experts and commentators tend to see a trend: as pandemic concerns relax, home prices dip.
Why you should talk to us before you decide
Now is a great time for many people to buy a home. You might be one! The Wood Group of Fairway can help you find out if buying a home in 2021 is the right move for you. First, tell us a little about yourself. Get started on a free pre-approval in just a couple of minutes!