My friend and Nest colleague, Jim Duncan, loves to answer questions like this with "it depends." And when you're trying to decide whether to buy a house now, or next year, it depends matters.
As I mentioned in our upcoming Nest Market Report (would you like a copy? Email me with 'Market Report' in the Subject line, and I'll ensure you receive one), I expect the market to rebalance in the coming year. Let's look at why I say that:
- Across the state of Virginia, forecasts call for modest price growth - think 2-3% annualized - and a slight increase in buyer activity - Virginia Realtors puts out a nice infographic, or you can really get nerdy with The Mortgage Reports.
- When examining national reports, some areas of the country are forecasting a decline, while others are predicting a positive market. The New River Valley is somewhere in the middle, with modest appreciation and strong job growth.
- Mortgage rates are expected to stay in the low 6s and possibly dip into the 5s. Will we see 3% again? Nope.
While we do not expect to see a decline in prices overall in the NRV, we also shouldn't expect to see massive runs. We're looking at a market that's resetting, and we - agents and buyers and sellers - should reset our expectations, too.
So does it make sense to buy now? It depends. Look, if you have a stable job and you plan to be here for 7-10 years, then it might make sense. Real estate has historically been a very stable investment. But buying a house isn't an investment as much as it is a roof over your head, a place that fits how you live, and where you can see the future. If that's all true and you've found a great place, then waiting until 2026 - or 2027? - could be just rolling the dice that those factors will still be there in the future.
Okay, Jeremy, so I should wait until next year? It depends.
I'm in the business of selling homes, and so it's not a great business model for me to say hold off - but sometimes the best decision is to hold off. Think about it. You're coming to Virginia Tech or Radford University to pursue an advanced degree. You know that's going to take three years, and then you'll be on to bigger and better things. Should you buy? Probably not. A $300,000 home, appreciating at 3% year-over-year, will be $327,000 after three years, and if it costs between 5-8% to sell a home, most or all of your gains could be wiped out by closing fees and expenses. Or, you're stretching every dollar to make the payment work; you can do it, but one broken heat pump or medical bill, and suddenly you're in the red. The math might say you can buy, but your cushion is about as thin as a piece of two-ply.
Are rates going to be better in 2026? Maybe. Will there be more houses on the market next year? Probably. Will prices be higher? Almost certainly, but remember that if rates are lower, the difference could balance out. The question you really need to ask yourself is, "If I buy this house and keep it for 7-10 years, is this a good decision for my life and my money right now?" If the answer is yes, and you can afford the monthly payment and be comfortable, then whether you buy your home in 2025 or 2026 doesn't really matter. If the answer is no, then let's discuss how to adjust and determine the next steps.
