In the year In 1982, British punk rock band The Clash released their hit song “Should I Stay or Should I Go?” Forty years later, potential home buyers and sellers are now asking themselves the same question.
With mortgage rates currently hovering around 6 percent for a 30-year fixed plan, many home buyers are debating whether to stay in their current housing situation or jump into the home buying market. Home sellers now face the tough decision of whether to list and reap the rewards of the tail end of the seller’s market, or hold on to their homes until interest rates drop.
Sean Snyder is the head of investment strategy for Citibank’s private wealth management division in Manhattan and has appeared as a guest on several major television networks. “I think we’re going to see more and more people waiting to buy a home, and we’re starting to see that,” he told The Epoch Times.
According to Centriloc’s May Foot Traffic Report, home showings are down 24 percent nationwide, and are down in every region, with the largest declines in the Northeast at 55 percent, the Midwest at 29 percent, the West at 27 percent and the South at 14 percent. “When you look back at 2021, when the lowest rates were around 2.96 percent, that number has now doubled,” Snyder said.
The decision regarding the best time to buy a house is also based on the mindset of the buyers.
“If you really like a home and plan to live in it for a long time, that’s like making a long-term investment,” he explains. But if you’re planning to move in a few years, you may be risking that house prices won’t return to their current levels. People need to think about their individual circumstances.
Meanwhile, rents continue to rise, leaving many potential homebuyers to make tough decisions about whether and when to buy. Rent.com’s June Rent Report shows that rents are on the rise nationwide. One bedrooms were up 25.5 percent year over year and two bedrooms were up 26.8 percent year over year. On average, Americans are paying $1,722 a month for a one-bedroom apartment, and $2,047 for a two-bedroom apartment.
“In Manhattan, where the average monthly rent is nearly $4,000, the current cost of renting is probably less than buying,” Snyder said. However, in other parts of the country, monthly mortgage payments can cost the same or less than rent.
Snyder believes potential homeowners may start moving away from fixed-rate mortgages and opt for variable-rate mortgages instead. “That way, if rates go down in the future, you can take advantage of the lower rates,” he said.
On the other hand, Cinder believes sellers are in better shape. “Inventory is still low and the home owner vacancy rate is still below one percent nationally,” he added. “I also think the market will be more stable at some point.”
According to the National Association of Realtors’ latest housing report, existing home sales fell 3.4 percent in May, with the national median sales price exceeding $400,000 for the first time. At $407,600, this represents a 14.8 percent increase from the national median sales price in 2021.
For the ninth consecutive month, the South recorded the highest price increase compared to other regions of the country. The May median sales price for a single-family home in the South was $375,000 — a 20.6 percent jump from a year ago.
The Northeast leads the single-family home sales listings with a median of $409,700, up 6.7 percent from 2021 prices. Western US median prices rose 13.3 percent to $633,800, while the Midwest held the most modest listings, with a median price of $294,500—a 9.5 percent increase over last year.
Nikki Field, one of the principal agents with Sotheby’s International Realty in Manhattan, believes New York and other urban area buyers on the fence should act now. While mortgage rates have risen recently, they remain well below the 50-year average of 7.8 percent, she told The Epoch Times.
Field remembers from the 1970s to the late ’80s, when mortgage rates were as high as 20 percent. “Frankly, the luxury market can be indifferent about the rates,” she said. “They’re looking to diversify their portfolios and many of them are doing all-cash deals.”
First-time home buyers, Field notes, still know that New York is a “price game” and should take advantage of the upcoming summer market. “Winter is typically a very slow market, so these buyers can grab the best prices. If you strike in August, you may find properties left over from the spring months and distressed sellers may be more willing to negotiate before more competition in the fall market,” she explains.
As rents in the Big Apple and other major cities continue to rise, with Manhattan’s median entry-level price for a one-bedroom apartment between $780,000 and $800,000, first-time home buyers are still raking in the pie. “Anything under $1 million is still considered a bargain,” Field added.
One of the most popular requests for apartments is the outdoor area, balcony or garden. Co-ops generally cost less than condos, which often offer amenities like a pool, gym, game room, and living room.
For potential home sellers, he advises them to keep the field. “I think they need to review the second quarter numbers and make sure they can get what they want for their property,” she said. “If you’re relocating, or if you’ve identified a lot at the end of the purchase, I’d suggest paying for your property properly to move quickly.”
In other parts of the country, those seeking the American dream may find the Midwest to be the most promising area. Recent reports from both Zillow.com and Realtor.com have identified Indianapolis, Indiana and its surrounding areas as one of the most affordable areas to live in the United States.
Just like the rest of the country, his area has seen rising home prices and low inventory, Justin Pere, a member of Realty One Group’s New Horizons Pere Home Group in Indianapolis, told The Epoch Times. “Now with higher interest rates, some first-time home buyers are being priced out of the market,” he said. “Some people who were pre-approved a few months ago are now finding they can spend less on a home because of those price increases.”
The median price of a single-family home in the city of Pere and surrounding cities is now $287,625, but in the Indianapolis city limits, the median price is slightly higher at $305,000. In Hamilton County, one of the wealthiest areas in the state, the median price of a single-family home is $450,000. Most homes for sale these days are on the market for an average of four to five days.
The decision to buy or sell now is a “mixed bag” as opposed to waiting, Pere said. “Some want to buy now because they’re afraid things will get worse, and others are just watching interest rates to see what happens.”
Like Field, Pere recalls double-digit mortgage rates and suggests those looking to buy do so now, while rates are still relatively low. “I don’t have a crystal ball, but I think we could see seven to nine percent by the end of the year,” he said. “If you can do it now, you should because it’s a lot better than paying rent in the end.”
Like many parts of the country, rents in Indianapolis are on the rise. “I personally think the best thing you can do — as a first-time home buyer — is to get a starter home or multi-family home and rent out the units to help supplement your income,” he explained. “That way, it’s a long-term investment that can help you when you’re ready to make your next move.”
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