3 Reasons Not to Buy a House in 2023
By Christy Bieber,2023-02-06
Should you buy a home this year? That's a complicated question to answer. Getting a mortgage and buying a property is a big decision, and it may not be the right time for you to make that move.
In fact, here are three possible reasons why you may not want to move forward with becoming a homeowner in 2023.
1. Mortgage rates are high
The weekly average mortgage rate was 6.15% as of Jan. 19, 2023, according to Freddie Mac. While this is a bit lower than the weekly average rate over the past few months, it is considerably higher than rates have been in recent years. In fact, until recently, mortgage rates hadn't consistently topped 6% since 2007.
When mortgage rates are high, your monthly payment and total borrowing costs are more expensive. This could make homeownership less affordable for you -- and, if high rates push your payment too high, then you should not move forward.
There's no guarantee rates will necessarily go down anytime soon. But if a recession leads to reduced demand for home loans or causes the Federal Reserve to stop raising rates and drop them instead, it's very possible they will. Even if that doesn't happen, the bottom line is if high rates have made your mortgage loan unaffordable for you, you should not move forward with purchasing a home in 2023.
More: Check out our picks for the best mortgage lenders
2. Property values are still high in many parts of the country
Property values soared during the COVID-19 pandemic, and most experts expect them to continue rising in 2023 -- albeit at a slower pace than recently.
Buying when prices are up could mean you end up stretching too much to purchase a property that you really can't afford. That's not a position you want to find yourself in. You could also risk ending up underwater , which means owing more than what you could sell your house for, if the housing market starts to slow down.
Rather than purchasing in 2023, you may want to wait and see how things play out in the housing market and if prices start to fall to pre-pandemic levels as high mortgage rates reduce demand over time.
3. The country could enter into a recession
A number of financial experts have predicted the country will fall into a recession in 2023. A recession is a prolonged period of economic slowdown, which usually means there's reduced demand for products, and many companies end up laying off employees.
If an economic downturn happens, it's possible that could have financial consequences for you. Depending on your industry and experience, your job could be at risk or your income could be reduced.
If you have committed to buying a house and you end up earning less money, this could have serious consequences if you can't afford to continue to make payments. Unless you have a hefty emergency fund , a very stable job, and are confident in your continued ability to pay your mortgage in any economic conditions, you may not want to jump into buying a home during these turbulent times.
Now, some people may still decide they're in a good financial position to buy and they don't mind paying a higher mortgage rate or even a higher price for their home. And that's not necessarily the wrong choice for everyone.
Ultimately, you need to consider your own financial situation and goals when deciding whether to buy. But you definitely should be aware of these issues that could make buying in 2023 a mistake.
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