Is It a Good Time to Buy a Home - Your Guide to the Housing Market for New Construction

This blog was provided by our expert finance partners at Pulte Mortgage.

With the real estate market always changing, it's natural to wonder, “Is it a good time to buy a home?” Despite interest rates going up, there are some compelling reasons why now is still a great time to make that dream of homeownership a reality.

 

Summary:

• Factors to Decide When It’s the Best Time to Buy a House for You
• Pros and Cons of Buying a New Build Home in Today’s Market
• Finding the Perfect Financing Option for Your New Build
• Tips and Tricks to Help You Get the Best Price on Your New Home
• What to Look for When Choosing a Location for Your New Home

 

Factors to Decide When It’s the Best Time to Buy a House for You

Deciding if it’s the right time to buy a home is a big decision that shouldn't be taken lightly, especially in today's ever-changing real estate market. To help you make the right choice for you, here are some key factors to consider before buying your next house.

 

Financial Readiness

Your financial health is the most important factor when deciding if now is a good time to buy a home. Achieve your dream home while keeping your financial health in check. Assess your credit score, debt-to-income ratio, and savings to help make a smart mortgage decision that aligns with your financial goals.

 

Housing Market Conditions

Pros and Cons of Buying a New Build Home in Today’s Market

As the housing market remains unpredictable, many people are trying to weigh the pros and cons of buying a new build home in today's market. On one hand, buying a new build can come with the comfort of knowing everything is brand new, and can sometimes offer warranties and lower maintenance costs. However, it's important to also consider the potential cons. Let’s take a look at some of the pros and cons of buying a new construction home in today’s market.

 

Pros

• Less Competition - With interest rates on the rise and the housing market continuing to cool off, industry professionals are expecting the number of homes for sale to increase. This, combined with the decline of stressful bidding wars and above-asking-price offers, could mean less competition (and stress!) when searching for a new home.

• Increased Equity - One of the best benefits of homeownership is the home equity you can build over time. Despite home prices continuing to rise largely in part due to inflation, if you are purchasing in an area with consistent growth, it is likely your home value will continue to rise above what you paid for it.

• Builder Incentive Offers - As the market begins to shift, now could be a great time to take advantage of incentive offers from your home builder! These incentives could include covering your new home’s closing costs or temporarily lowering your interest rate with a buydown. Reach out to your nearby Pulte Homes Community’s Sales Consultant or Pulte Mortgage Representative to learn more about Pulte Homes incentives in your area

 

Cons

• Interest Rates - While higher interest rates may dissuade many homebuyers in today’s market, remember that you should “marry the house and date the rate!” If you are financially ready and you find your dream home, it’s best not to wait around. You can always choose to refinance your home once interest rates drop.

• Upfront Costs - No matter the market, buying a home comes with some hefty costs. If you have big-ticket priorities, such as paying down debts or finishing your degree, you’ll want to carefully consider if buying a new home right now is the best choice.

• Long-Term Commitment - When you purchase a home, you’ll be putting down roots for several years, at least. A good rule of thumb is that you’ll need to stay in your home for at least five years to start building equity. So if you do intend to buy a home, know that you may be making a five-year minimum commitment before you’ll start getting any return on your investment.

 

Your Priorities

Homebuying is a major milestone that's often driven by more than just the housing market. While market trends certainly play a role, life's pivotal moments are often the biggest drivers for making the leap into homeownership. Perhaps you landed a new job or your family is growing, and you need a home that's closer to work or offers more square footage. These are just a few of the many priorities that can factor into your decision about whether it's the right time to buy a home. Ultimately, it's up to you to decide what's most important and whether buying a home makes sense for you at this point in your life.

• Family - When thinking about buying a new home, one of the most important considerations for many buyers is their family. Whether it's the desire for more space to accommodate a growing family, or the longing to live closer to loved ones, family plays a significant role in the decision-making process. If family is a top priority for you, and you're thinking about making a move, it's worth exploring your options and seeing if now might just be the perfect time to buy.

• Space - Some homebuyers may be in the midst of expanding their family and need more space to accommodate their growing household. Others may be opting for a downsized haven, valuing simplicity and efficiency. Whether you're looking for a larger or smaller space, the right time to buy ultimately comes down to how much of a priority space is for you.

• Career - Whether you want to cut down on your commute or you’ve gone remote and need more space, embracing a better work-life balance is key to many homebuyers.

• Lifestyle - Many homebuyers take their lifestyle into consideration when looking to buy a home. Whether it’s urban conveniences or suburban tranquility, your desired lifestyle will be a big factor when choosing to buy a home.

 

Finding the Perfect Financing Option for Your New Build

Working with an affiliate mortgage company offers more flexibility than using an outside lender, as the mortgage company is familiar with the builder’s process and can work more closely with the builder to ensure a smooth and timely closing. Partnering with a homebuilder’s affiliated lender like Pulte Mortgage can streamline the financing process and ensure a smoother, stress-free experience for new buyers!

 

Tips and Tricks to Help Get the Best Price on Your New Home

No matter what the housing market looks like, there are several tools that homebuyers can utilize to snag the best price on their new home!

 

Buydowns

When mortgage rates are on the rise, your lender may offer a mortgage rate buydown to help temporarily or permanently reduce your interest rate. This can help you save money by lowering your monthly payments during the initial loan term!

What is a buydown?

A buydown involves paying an upfront sum at the time of closing, which is then applied to reduce the interest rate for an agreed-upon period, often the first few years of the mortgage term. Homebuyers might opt for a buydown to alleviate initial financial strain, making homeownership more accessible. It's a nuanced approach that allows buyers to enjoy lower monthly payments early on, gradually stepping up as the interest rate adjusts to its original terms.

 

The most common mortgage buydown structures used are 3-2-1 buydowns and 2-1 buydowns:

 

3-2-1 Buydowns

A 3-2-1 buydown enables a buyer to pay less interest on their mortgage for 3 years after obtaining the loan. The points paid upfront reduce the interest rate by 1% for each of those first 3 years. For example, say a homebuyer qualifies for a 30-year mortgage at an interest of 5%. With the 3-2-1 buydown, they would pay an interest rate of 2% the first year, 3% the second year and 4% the third year but would have to pay the full 5% from years 4 – 30.

 

2-1 Buydowns

A 2-1 buydown applies to only the first 2 years of the loan where the interest rate would be 2% lower in the first year and 1% lower in the second. Using the previous example, the buyer would be expected to pay an interest rate of 3% the first year, 4% the second year and 5% from years 3 – 30.

 

Refinance

Homebuyers possess a valuable tool in their financial toolkit: the option to refinance once interest rates decrease! Refinancing, or “refi,” not only helps in managing costs but also provides an opportunity to adapt to changing circumstances and take advantage of improved financial conditions.

 

Builder Incentives

A big advantage of buying a new construction home is the financing incentives that are often available to buyers. Many homebuilders have affiliate mortgage companies that offer financing incentives such as lower closing costs, reduced interest rates, or other perks that can help you save money! Speak with a Pulte Homes Sales Consultant for the most current incentives.

 

What to Look for When Choosing a Location for Your New Home

With rising prices and a competitive market, it's important to do your research and make an informed decision. But that's not all - you also need to think about location. After all, this is where you'll be living for the foreseeable future. It can be an exciting experience, but it can also be a bit overwhelming. From nearby amenities to commute times, there are so many factors to consider. So, is it the right time to buy a home, and if so, where should you be looking?

 

Here are just a few of the location and proximity factors to consider:

• Amenities

• Nearby schools

• Restaurants and shops in the area

• Commute

• Quality of life

• Lifestyle fit

• And more

By doing your research and carefully weighing your options, you can find the perfect location for your new home. Explore new construction homes today to get an idea of what’s available.

 

Conclusion

If you've been keeping an eye on the housing market and wondering if it's the right time to buy a home, chances are good that you've also heard the rumblings about interest rates inching up. While that may give you pause, it's important to remember that the current market still holds opportunities for prospective buyers. It really depends on your priorities. Don't let the current market trends scare you off - now might just be the perfect time to buy your next home.

 

Explore new construction homes today or browse more Pulte blogs.

 

 

Written By: Meagan Rochard, a copywriter for Pulte Financial Services. 

Last Updated: 12/4/23