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Time in the Market Beats Timing the Market

Weighing options in today's market

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Working with folks looking to purchase a home in Bend has been tough for a few years now. Between COVID, low inventory and fierce competition, it seems like buyers have been unable to catch a break. Now things have sort of pivoted. I use that word because while things have changed a bit, by and large the market is still hot. Despite rising interest rates, prices are high and appear to be steadying and more and more inventory keeps popping up. The common question we are getting from potential buyers is, "Is now a good time to buy?" By and large, our answer is, "It depends." There is just a lot to consider right now, and everyone has a unique set of circumstances. Having said that, speaking from my own point of view I would consider the following few things.

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For first time homebuyers the question really is affordability. With the rising interest rates, the amount you will be approved for has likely changed in some regard over the last few months. Gone are rock-bottom interest rates, but that doesn't mean buying a house now is a bad investment. Assuming you are looking at a fixed-rate loan, it does mean your mortgage payment will be higher and that you will pay more interest over the life of the loan. Just a quick reminder: It is OK to buy a home and not have the best interest rate of all time; most people quickly forget their rate after closing anyway. The thing to consider is how you feel about the actual payment itself. A common quote we hear in Real Estate is "Time in the market beats timing the market"—meaning that we know the market fluctuates and goes up and down, but we have seen that over decades that it trends upward, meaning the fundamentals matter more than the timing. It is totally normal to feel nervous about buying your first home, but soon the nervousness gives way to the excitement of owning a home!

For those who already own a home and would like or need to sell and buy something else, there are some slightly different factors to consider. Many who have been in their homes over a few years have found themselves with substantial pieces of equity that they can capture with the sale of their home. This equity can be used for a substantial down payment on a new home and can help offset the higher rates on fixed mortgages. The equity can also be used to buy down rates or pay for points on the loan to decrease the interest rate and potentially save money long term. This makes sense for some who plan on being in the home for a while and is a simple math problem you can work through with a local lender. Another thing to consider is various variable rate loan products. While not for everyone, in certain circumstances these can be an excellent option, but one must know the associated risks, as well.

The key point here is that there is no one-size-fits-all plan. Since I cannot predict the future with any kind of accuracy I just try to work through the known facts and weigh my options. The best piece of advice I can give is to work with some professionals who can help you make the best decision for you. Not only do I talk to a lender and real estate agent, but I would also talk to a tax professional or financial adviser to weigh all your options if you are selling and/or buying a home.

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