16 Reasons Right Now Could Be the Worst Time Ever to Buy a House

Has the current housing market made you skittish about buying a home? Are you wondering if you'll need help to pay your mortgage once you get a home? You’re not alone, especially if you’re a first-time homebuyer.  

Many homeowners remain "locked in" thanks to low mortgage rates they secured during the pandemic, meaning they're not willing to sell their home and inevitably gain a higher rate. 

If you're a buyer in today's competitive market, here are a few reasons why you might want to consider holding out a bit longer.

Home prices are continuing to rise, with the national median sales price being $420,321, according to Redfin. This reflects nearly a 5% increase year over year.

What also doesn't help? Nearly a third of homes sold over the listing price within the last year. If you're looking to get ahead financially, this might not be the year to invest in a home.

Although there are more homes available compared to last year, supply is at a record low if you look at the last five years. According to Redfin, more than two million homes were available in March 2019. Currently, slightly more than 1.5 million houses are listed for sale.

High mortgage rates are keeping many would-be homebuyers out of the market. High rates substantially raise the monthly payments for borrowers. 

To illustrate this, the principal and interest payment on a $320,000 mortgage goes up by $600 per month when the interest rate jumps from 4% to 7%. Many 30-year rates are at or slightly above this rate.

Most people don’t have that much wiggle room in their budgets.

According to ATTOM, property taxes collected for single-family homes rose 6.9% in 2023. This was the largest total collected in the past five years.

In regards to individual rates, the report revealed an average tax on a single-family home is $4,062, a 4.1% increase compared to what the rate was in 2022.

Although the U.S. economy avoided a recession in 2023, some experts still point to the possibility of a recession in 2024 (although it should be somewhat mild compared to recent recessions). 

Home insurance rates increased by 20% in the last two years, according to Insurify. And they don't see the trend stopping, as the company predicts a 6% increase in rates this year.

What’s worse, some companies are excluding natural disaster coverage in certain geographic regions, leaving many homes vulnerable.

Although inflation has cooled a bit, many consumers are still feeling its weight when it comes to goods and day-to-day purchases. According to the Bureau of Labor Statistics, the consumer price index — an inflation measure that tracks changes in the prices of consumer goods and services over time — increased 3.2% in March compared to the same time last year.

This might not be apples to apples when it comes to home prices, but if your wallet is feeling stretched with smaller purchases, that usually means you want to hold off on larger investments like a house.

If it feels like you see a lot of homes that look vacant, it might be because they're owned by someone other than an actual family. Metlife Investment Management predicts that institutional real estate investors may control 40% of the housing market by 2030. 

In other words, families looking for housing are facing increased competition from Wall Street investors looking to bolster their portfolios.

This is troublesome because real estate investment trusts (REITs) and other investment firms have deeper pockets than most consumers and can buy homes for cash.

Inflation wouldn’t be such a big deal if wages were keeping up with the rising prices. Unfortunately, this hasn’t been the case. At its peak, price inflation had risen 9.1% whereas wages had risen 6.7%.

Wage growth managed to outpace inflation in the second half of 2023, but it remains to be seen if it can make up for the ground it lost earlier in the year.

Over 305,000 people were laid off in 2023—mostly in the tech sector. While the number of layoffs has slowed since the beginning of the year, they haven’t stopped. 

If you fear that your job is on the chopping block or is in a sector with many job losses, you may want to hold off on buying a house until your job is more secure.

Maybe you want to sell your home to downsize or upgrade, but if you’ve got a 3% interest rate on your current mortgage that you locked in a few years ago, changing to one with a 7% interest rate or higher is a tough pill to swallow. 

This may deter you from buying a home when you would in a different economic environment.

Data from Northwestern Mutual revealed that although the average Amercian's personal savings is around $65,000, this is a significant decrease compared to the $73,000 that was reported by the same study in 2021.

Consumer debt in American households has continued to rise over the last decade. In fact, credit card debt hit an all-time high in 2023. According to the Federal Reserve, credit card balances rose by $50 billion to $1.3 trillion over the last quarter, and total household debt exceeded $17 trillion.

If you find yourself with car notes, student loans, medical bills, credit cards, and other debt balances, now might not be the right time to take on a mortgage.

Many states and the federal government have upcoming legislation that, if passed, could ease the housing inventory and affordability problems we’ve seen in recent years.

The Biden Administration, for instance, the Housing Supply Action Plan in May 2022 that looks to make housing more affordable in the coming years.

Where you live also has a big impact on whether or not it makes sense to buy a home. Multiple cities in Florida, for instance, have seen home prices increase more than 15% over the last year — with Miami Beach being the top city at nearly 40%, according to Redfin.

Beyond sale prices alone, there are also cities where the market is strictly competitive based on high prices and supply. Homes in many California cities, for instance, sell above list price or receive multiple offers.

Maybe you’re one of the lucky few who can afford the high prices and high interest rates of the current housing market. But even if you find a house that meets your budget, you may not get very much house for your money.

If the houses you can afford are in poor locations, too small, or in need of expensive repairs that would make it hard to get ahead financially, it may be worth sidelining your home purchase until you’ve saved more or housing conditions improve.

Buying a home is a personal decision that should be guided not only by national trends like high interest rates but also by your financial situation and goals. 

A home is a great invest to start building wealth, but consider your local market before deciding whether or not now is the right time for you.