The decision to purchase a home comprises multiple factors. With a hot real estate market in the northeast and Massachusetts in particular, it has many of us asking the question: Is now a good time to buy a house?
To help you think through that question, we asked Bob Driscoll, Senior Vice President and Director of Residential Lending at Rockland Trust, about today’s market and what potential homebuyers should be aware of:
We are In a Low Interest Rate Environment, but Inventory is also Low
If you were to base the decision to buy on interest rates alone, now would be a great time to do so. Interest rates on mortgages are low, meaning that a mortgage will cost you less in the long run.
Where is the downside? There is low inventory because the real estate market is still hot. “I’ve read that 60% of homes are receiving multiple offers and going for above asking price,” said Bob. “Especially now, every single dollar does matter. If you’re a first-time buyer, expect a pretty long process and that you will likely need to go above asking price.”
Being prepared will help with the emotions in this process, as some buyers can face fatigue after getting pre-approved, facing bidding wars and potentially losing out on a favorite property. That said, Bob also cautions against overpaying due to top-market values. “Anytime you buy, be sure you understand what you are buying and the economics that go with it.”
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COVID-19 May Impact Buying Trends
Bob mentioned that in the wake of the COVID-19 pandemic, we may see a shift from congested, close quarters urban living to more spacious suburbs. While millennials have tended to live in clustered, tight communities, this group may start to see value in the areas surrounding Boston — and get a lower price per square foot on housing.
This trend may do two things. It could increase the inventory in the city, potentially leading to lower prices in more urban areas. At the same time, it may further reduce houses on the market in suburban areas and drive up home prices there.
The Recession That Doesn’t Feel Like One
The financial uncertainty brought on by COVID-19 may give potential buyers some pause. If you have lost your job, been furloughed or had pay affected, these factors may impact your decision (and ability) to buy or not.
Bob explained that while we are technically in a recession, it may not necessarily be fueled by economic factors like the 2008 recession, and instead may simply be due to the pandemic. It is unclear whether this is a long term issue and how it will change over the course of the next year.
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Bottom Line
At the end of the day, the question of whether or not to buy is different for each buyer and you need to consider what is best for you. If you can purchase a property that you will be in for several years, getting into a property now and starting to build equity may be in your best interest. Talking to a financial advisor can help you sort out your financial situation, goals and set up a plan to get you where you want to be.
Rockland Trust has helped thousands of people like you, from first time buyers to those looking to renovate their home to those who are ready to downsize. If you have home-ownership questions, check out our Learning Center for helpful advice about owning a home.
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