If you want to buy a home right now, be forewarned that the real estate market is a tough one for buyers.
A new report from real estate website Zillow forecasts that home values will continue to trend up, rising to 21.6% in May. That’s in contrast to Zillow’s report back in December 2021 that predicted housing values would jump no higher than 11% this year.
With the market continuing to trend upward, it’s not a great time to be house-shopping.
Should You Buy a Home in This Crazy Housing Market?
One couple, who are currently renting a house in Los Angeles for $1,000 a month and looking to buy a home in that area, recently asked money expert Clark Howard for his advice on what they should do.
Because of the current real estate market, which Clark calls “ridiculously pricey” and the low rent (at least for L.A.) the couple is paying, Clark has the following advice:
“I know this is weird and crazy, but it would definitely be to your advantage to continue to rent and not try to buy right now.”
“Conditions in the real estate market, as you know, not just in California, but around the country, are very overheated right now,” added Clark. “And the market is inflated for a number of factors that I’ve talked about related to the pandemic, with too much money floating around and record low-interest rates.”
Looking To Buy a House Right Now? Read This
With real estate prices on the high end, here’s Clark’s advice for those looking to buy a home right now:
Assess Your Financial Situation
Take a good look at your money situation to see if you can really afford the homes that are out there right now.
You’ll typically need a 20% down payment for a home, but there are other expenses you’ll need to calculate such as appraisal fees and closing costs.
And if you’re thinking about buying a home, the #1 thing you need to do is get out of debt.
Saving money is the best way to afford a home in today’s market.
“If you do want to buy a home, keep saving money,” he says in the case of the couple. “Wait to see if the market is going to moderate.”
Even though real estate prices are rising nationwide, they could be better for your wallet in another part of the country.
In the case of the couple, Clark says, “Consider relocating to somewhere else in the country where you’re not going to have the commute problems of Southern California or the housing costs of Southern or Northern California along the coast.”
If your circumstances allow, you may be able to move to a state or city that will even pay you to live there.
For example, the small city of Lincoln, Kansas, is currently accepting applications for its Free Home Site Program, which grants free land to eligible prospective homebuilders.
And Lincoln isn’t the only city. Here is a list of places that will pay you to move there.
If you are currently or recently buying a home or selling a home, tell us about your experience in our Clark.com Community!