Money Milestones
Did We Wait Too Long to Buy a House?
Back in 2016 — about a year after we relocated from Los Angeles, California to Springfield, Missouri — I wrote about how my wife and I were starting to think about buying a home and how we were dipping our proverbial toes into the process. Since then, we’ve gone up and down on the idea, meaning that we never progressed beyond occasionally checking Zillow. That was until more recently when the idea of owning a house (or other abode) crossed our minds once again. There’s only one problem: have you checked the housing market lately?
Wondering how bad it really was and if we really had waited too long, I recently checked my personalized mortgage rates and searched for some homes in our area. Here’s what I found.
My Experience in the Current Housing Market
My mortgage rate options
Seeing as the APY on my high-yield savings account has been soaring over the past several months now, I was already well aware that mortgage rates were climbing as well. Nevertheless, when an offer from SoFi that would net me $10 for checking my rate arrived in my inbox, I said, “Why not?” And so, after entering some basic info about myself and the price of the home I was allegedly looking at (as well as temporarily thawing my credit reports in anticipation of the soft pull SoFi would need to do), I was able to see just how much I’d need to pony up for a mortgage today. For context, I put that I’d be requesting a $180,000 mortgage (a theoretical $225,000 home with 20% down) and my credit is in the upper 700s/lower 800s. With that, here’s a table of my current offers (as of August 2023):
| Options | Monthly payment | Rate | Points/Credits |
| 30-year fixed option 1 | $1,213 | 7.125% | 1.84 ($3,310) |
| 30-year fixed option 2 | $1,305 | 7.875% | -0.12 (-$209) |
| 30-year fixed option 3 | $1,336 | 8.125% | -0.69 (-$1,238) |
| 15-year fixed option 1 | $1,630 | 7.125% | 1.21 ($2,178) |
| 15-year fixed option 2 | $1,580 | 6.625% | 1.96 ($3,533) |
There were also adjustable-rate mortgage (ARM) options, but those strike me as a gamble. While some might anticipate that rates will eventually go down, that’s not a guarantee. Thus, it seems better to lock in a rate regardless of what it is rather than deal with the possibility of it going even higher.
Anyway, back to the fixed-rate options, on the surface, those figures don’t seem so bad considering that they’re right around what we pay for rent. However, don’t forget that this is just for the mortgage itself. Thus, when determining whether we could actually afford to buy a home, we’d also need to consider insurance, taxes, utilities, repair costs, homeowners association fees, and so on.
Yet, that’s not the part that really gets me. If you look at where mortgage rates were at the start of 2022, you’ll see that they were about three percentage points lower at around 4%. While the difference between 4% and 7% might not sound that drastic, when you plug in the lower number, you’ll find that our mortgage payments would be around $850 instead of $1,200. Framed another way, we’d be paying nearly 50% more per month due to the higher rate. And that’s not just for a short period of time — that’d be for a full 30 years (assuming we don’t refinance). That’s crazy!
Available listing
So, assuming that we decided we could afford the proposed payments and were fine with the rate, what houses are available? Well, we ran a good ol’ Zillow search in our area and turned up… not a whole lot.
Drawing a search of two zip codes and meeting our most basic needs (two bedrooms and at least 1.5 baths), in our price range, only around two dozen homes came up. Actually, that’s with extending up to $250K. At $225K, I literally count 17 properties that fall into our parameters. Compare this experience to times we’ve looked in the past and saw multiple listings in the same complex. Now — lots of blank space in between listing pins.
There are a few likely reasons why resale housing inventories are low — but a major one brings us back to interest rates. If someone purchased a home and has a mortgage locked at 3%, they may not be too excited about potentially selling their home and taking on a new mortgage at today’s rates. After all, while I’m only looking at the theoretical price increase versus a rate I never had, these people would actually see a significant increase in their payments.
The other issue is also related to prices: they’ve gone up. When we first moved to Springfield, the $200K listings we’d look at were huge and way more than we needed. Now, I can’t help but think that our current budget is just too low to find anything we would want. Of course, once again, our budget could be larger if the mortgage rates weren’t so high (..and now we’ve come full circle).
Where do we go from here?
For all of my complaining, the truth is that mortgage rates have been even higher than this before and what we’ve seen over the past few years have been historical lows. Thus, it’s not that what’s being asked for now is that out of whack — it just looks bad in comparison. This brings me to the question I posited in my headline: did we wait too long to buy a house?
The answer in my mind is “probably not.” While we may have missed the boat on those historical lows, that shouldn’t prevent us from ever buying. Instead, we’ll just need to adapt to whatever housing market we find ourselves in when we really are ready to buy.
In the meantime, however, I’m not personally in any rush. For all of the downsides that come with renting, there are some advantages as well. These include flexibility, amenities, maintenance included, and, in our case, some utilities bundled in for a better rate than we’d be able to get on our own. For those reasons, we’re not quite ready to leave these things behind and take on the responsibility of owning a home.
On that note, if we were to buy a home, I’m currently more interested in a condo or townhouse than a regular house. In my mind, this would be a perfect medium between apartment living and homeownership. Maybe that’s a bit foolish since it also comes with some of the same trappings of apartment life (mainly the fact that you’re sharing walls with neighbors) but that’s just where I’m at currently.
Even if I’m not in a hurry to become a homeowner, looking at how much our potential situation has changed in a few short months is staggering. To be honest, realizing this also just impacts the way I think of our finances overall — are we falling short of our potential? And how long can we even afford rent at this point?
At these points, these questions are a practice in the dramatic as we’re perfectly comfortable. Still, I likely won’t be able to shake the idea that, perhaps, we did wait too long on buying a house and missed our chance. Of course, things can always change — and quickly — so we’ll see what happens.
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