I saw a few houses, and decided to buy one of them. A condo originally priced 210,000, and they accepted my 193,000 offer. I'm a first time buyer, with zero experience and my agent helps me with things. How is housing market right now? Is it a good time to buy?

I'm in Chicago Suburbs, and thinking about taking a 15-year loan.

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    Surely this is a question that should be asked before you've got an accepted offer?! There is no single housing market-- there are a huge number of markets. Some of them are doing well, some are doing poorly. Some of those doing well will do poorly over the time you own the property. Some of those doing poorly will do well while you own the property. We can't realistically guess whether it is a good time for you to buy this property any more than we could guess that it was a good time for someone else to buy Apple stock. – Justin Cave Feb 13 at 1:24
  • Not asking a good time for myself, I mean generally! Given the demands and offers, maybe an agent can say is things are poor or heating up. – Tina J Feb 13 at 1:55
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    "Good time" is only possible to determine in retrospect - market timing in terms of what is a high and what is a low is effectively impossible. If you decide the sell the house, say, 10 years from now, then - and only then - will you know if you really "bought at a good time". Everything in between is guess work by people who pretend to know things that cannot be known. Buy only if and when it makes sense for you compared to your other options. – BrianH Feb 13 at 2:12
  • The question requires us to make a prediction of the future; the only time you can know if now is a good time to make a particular choice is in the future. This is not a good site for questions that require predictions of the future; none of us know the future. – Eric Lippert Feb 14 at 16:20
  • I'm asking for opinions. Everything on money advise is opinion based. Idk why this well-received question is off. If there is a defintie answer, then just Google, why bother raising here?! – Tina J Feb 14 at 17:42

I would say that it is a good time to lock-in a fixed mortgage rate. There are a few predictions that large volumes of Treasury securities coming to market could spike longer term interest rates. That situation could produce inflation and recession at the same time which is stagflation.

And there is some prediction of mild recession after the year 2019. These predictions might be combined with a prediction of an inverting yield curve which is lower long-term rates. But neither recession or higher mortgage rates would be good for real estate values.

However, inflation increases the cost of rent and so buying a house is an inflation hedge.

  • Great answer. Thanks. One question is where to get the mortgage from? The agents usually have a partner they ask for pre-approval. Is it generally a good idea to get mortgage from those? – Tina J Feb 13 at 4:39
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    I wouldn't know where to get a mortgage except that possibly a large number of co-workers use a particular bank or credit union. I would want a mortgage with no pre-payment penalty. – S Spring Feb 13 at 4:55
  • What is pre-payment penalty? Btw, is a 3.75 a good rate? – Tina J Feb 13 at 13:14
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    A pre-payment penalty is a fee you pay if you pay the loan off earlier than its stated term. (For example, you pay off a 15-year mortgage in 10 years.) In the US, they are rare or non-existent. (At least, no mortgage company or bank I've ever talked to has them.) But best to confirm before you sign the paperwork. – chepner Feb 13 at 13:26
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    @TinaJ This is a pretty solid answer. Lock in that fixed rate mortgage asap. I have 4 right now. This is the last time cash will be this cheap in our lifetime. Look at interest rates of the past. The Fed is hiking rates almost quarterly now. Also, yes, 3.75% is an excellent rate – Anthony Russell Feb 13 at 14:01

Real estate is very local. It could be an awesome time in one neighborhood and a terrible time a few blocks over. There really is no way to generalize.

Whether it is a good time depends way more on your personal situation, factors may include:

  1. Reliability of income
  2. Stability in housing needs - Low probability of needing to move for a job, or needing extra bedrooms.
  3. Enough saved up - Can you afford a 20% down payment? Do you have an emergency fund? Is your mortgage less than 35% of your gross income?
  4. Are you mentally prepared for the responsibility of a home? You may miss your landlord- they fix things for you!
  • I have all the full price in cash (and I will be aboluste 0 then!). But would prefer a loan. I'm escaping my landlord! – Tina J Feb 13 at 2:39

First, whether it's a good time to buy a house in general is rarely useful information. What matters is whether it's a good time for you: things like your current income, future plans, and risk tolerance are always bigger factors than the local market. As well, in some markets renting and buying are entirely different kinds of homes. Where I live renting a house is close to impossible, and there are no apartment buildings: you either buy a whole house or rent a "flat" in a huge old place that has been split up into them, a tiny apartment above a store, or a basement apartment in someone's home. So when you want a house, you pretty much have to buy.

That said, it's usually a better time to buy than to sell, simply because you never have to buy and some people have to sell. If there are a lot of houses being sold, the price goes down, which is good for you. If there are not many, the price goes up, and you might decide to wait and buy later (or you might get excited about the rising value of your asset and join the crowd.) It's easy to spin either of these as "a good time to buy" and most real estate agents will do that. After all, they don't get paid if you don't buy anything.

If you know you want to live in this location for at least 5 years, and with this size of living space (eg are not planning to have a lot of children or start a dog breeding business or whatever else might need more space), and are comfortable with making your own repairs and improvements, then you're ready to look at the financial side of being ready to buy. Buying a condo takes some of the maintenance work out of the picture and can make it easier (requiring you to be less ready) than a detached house where you have to mow the lawn and paint the outside. Only when you know the you-personally factors are "ready" should you run the numbers to see if you're financially ready.

  • I liked seeing numbers. Yes, I think I will stay here for at least 5 years. – Tina J Feb 13 at 16:07

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