💡2025 Real Estate Dilemma: Is It Better to Buy Now or Wait? 🤔

Hello Hampton Roads,

Is it better to buy now or wait?  That's the question I am hearing the most with the start of the new year from both first time homes and repeat home buyers alike. The answer it it depends.  Deciding whether to dive into the housing market or hold off is one of the most pivotal choices you can face. With fluctuating mortgage rates and evolving housing dynamics, the right move depends on your personal circumstances, financial preparedness, and market trends. Let’s dive into the factors shaping the 2025 real estate landscape and offer actionable advice to guide your decision.   

Mortgage Rates: Where Are They Headed?

In recent years, mortgage rates have risen from historic lows. As of January 2025, average 30-year fixed mortgage rates hover around 6.5%-7%. While these rates are higher than the sub-3% rates seen in 2021, they are still historically moderate compared to the 1980s, when rates exceeded 10%.  Additionally, according to the Fannie Mae Sentiment Home Purchase Index, folks are becoming more optimistic and expect rates to decline over the next 12 months. 

Actionable Tip: Stay updated on mortgage rate trends by checking reputable sources like Bankrate.com, and Mortgage News Daily. Lock in a rate when it aligns with your financial comfort zone.

Personal Considerations: What’s Right for You?

Your personal situation plays a critical role in deciding whether to buy now or wait. Here are some key questions to consider:

1. Are You Financially Ready?

• Credit: Do you know what your credit score is? The minimum score for many loan products is a 620 middle score. A lender will look at what each credit bureau (Equifax, Experian and TransUnion) is reporting for your score and use the middle score of the three. The higher your score the better in order to ensure the best rates. 

• Down Payment: Do you have enough savings for a 10%-20% down payment? Or do you qualify for 100% financing loans or down payment assistance?

• Debt-to-Income Ratio (DTI): Lenders typically look for a DTI under 43% however there are some loans that allow for up to 50% DTI with automated underwriting approval. Calculate yours to ensure you qualify for favorable loan terms.

2. What Are Your Long-Term Goals?

• If you plan to stay in the home for at least 5-7 years, buying now could make sense, as you’ll build equity over time.

• If you’re unsure about your location or career stability, waiting may provide flexibility.

3. How Competitive Is the Market?

• Hampton Roads is still considered to be a seller's market with the best homes still selling for slightly over to slightly under the list price. For example,  in Virginia Beach, detached homes sold for 99.7% of their asking price in December 2024, so acting quickly is essential.

• However the silver lining for home buyers is that seller are more willing to negotiate concessions and pay some closing costs.

Market Conditions: What’s Happening in 2025?

Housing Inventory

Nationally, housing inventory remains tight, with a 2.5-month supply in many markets. This is below the 6-month supply needed for a balanced market. Low inventory keeps prices elevated, making timing critical.

Home Prices

While price growth has slowed compared to 2020-2022, many areas are still experiencing increases. For example:

• Chesapeake: Median detached home sold price of $465, 250 (December 2024) compared to $392,950 (December 2023)

• Norfolk: Median detached home price of $324,900 (December 2024) compared to $301,000 (December 2023)

Waiting may result in higher prices if inventory remains low, but a market correction could present opportunities for patient buyers.

Actionable Tip: Monitor local market trends. Every month, REIN, the Hampton Roads local MLS, releases monthly statistics for home sold as well as active listings per city.  Additionally, the Hampton Roads Planning District Commisison, publishes a monthly update on the Hampton Roads economy.  If you would like information on a particular neighborhood or subdivision, contact me for a free market activity report. 

Should You Wait or Buy?

When Waiting Makes Sense

• You Need Time to Save: If your savings aren’t where they need to be, waiting can help you avoid financial strain.

• Uncertain Market Conditions: If you’re in a high-priced market showing signs of cooling, waiting may allow for better deals if you have the luxury of waiting.

• Job or Lifestyle Uncertainty: Major life changes like a career shift or relocation may make waiting the smarter choice.

Action Plan for Waiting:

1. Boost your credit score by paying off debts and keeping credit card balances low.

2. Save aggressively to cover expenese like a downpayment and closing costs.

3. Stay informed about market trends to spot opportunities.

When Buying Makes Sense

• You’re Financially Ready: A stable job, solid savings, and manageable debt levels indicate readiness.

• Long-Term Plans: If you’ll be in the home for several years, the benefits of building equity outweigh short-term rate fluctuations.

• Favorable Local Market: If your desired area has limited inventory or rising prices, acting sooner can save money in the long run.

Action Plan for Buying:

1. Schedule a buyer consultation with a local real estate agent who understands the market. Make sure the person you decide to work with has a good understanding of your needs and is a good fit for how you like to work to help you accomplish your goals.

2. Explore your financing options. Get pre-approved for the best loan products that meet your needs. Lenders offer different products and it is important to compare rates

3. Once you find a home you like, before making an offer, ask your lender for a fee sheet so you can see what your monthly payment will be based on the current interest rates as well as what your anticipated closing costs will be.  

The Emotional Side of Waiting vs. Buying

Buying a home is more than a financial decision; it’s an emotional one. Consider how owning a home could impact your life:

• Stability: Owning provides stability and control, especially for families, offering a sense of permanence and belonging.

• Flexibility: Renting or waiting allows for adaptability in uncertain times, giving you the freedom to relocate or adjust your living situation without long-term commitments.

• Pressure and Stress: The process of buying can be stressful, from securing financing to competing in a tight market.

• Peace of Mind: Once you own a home, there is peace of mind in knowing your housing costs are fixed, providing a sense of security against rising rents.

Conclusion: Tailor Your Decision to Your Needs

There’s no one-size-fits-all answer to the question of whether you should wait or buy a home in 2025. By evaluating your financial readiness, understanding market conditions, and considering your long-term goals, you can make an informed decision that’s right for you.

Whether you choose to wait or buy, planning is key. Connect with a real estate agent and mortgage professional to create a strategy that aligns with your unique situation. Schedule a free consultation with me to discuss your options and make an informed decision: https://calendly.com/liz-schuyler.

Thanks for Reading,

 

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