Source Article: https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-survey?distinct_id=Oc-iqbfpSg&user_email=natrojas%40kw.com
The latest Fannie Mae Home Purchase Sentiment Index® (HPSI) shows a stark reality: homebuying sentiment is at an all-time low. Only 14% of consumers think it’s a good time to buy a home, down from 20% last month.
With 86% of consumers citing unaffordability, it’s easy to see why many are feeling pessimistic about entering the housing market. However, as a real estate agent who closely monitors market trends, I believe this could be one of the best times to consider buying a home. Let me explain why.
1) Market Realities
It’s important to understand that consumer sentiment often lags behind market realities.
Yes, mortgage rates and home prices have been rising, but this doesn’t necessarily mean it’s a bad time to buy. In fact, waiting could result in even higher prices and interest rates.
Historically, real estate has been a solid investment, with home values generally appreciating over time. Buying now locks in your purchase price and interest rate, protecting you from future increases.
2) Competition
The current market conditions underscore the importance of educating yourself. With only 14% of consumers believing it’s a good time to buy, there is less competition. This could be a golden opportunity to find a home without the bidding wars that have characterized the market in recent years (or less bidding wars 
). Additionally, while only 64% of people believe it’s a good time to sell (down from 67%), some homeowners might still be motivated to sell due to personal circumstances, potentially leading to more listings and better deals.
3) Interest Rates
One critical factor to consider is the pent-up frustration with housing affordability. Many hoped that mortgage rates would decline, but that hasn’t happened. This frustration is evident in the sentiment index’s decline.
However, this also means that the current sentiment is shaped more by emotional responses than by the actual state of the housing market. By educating yourself and looking at the broader picture, you can make a more informed decision. Friendly reminder, and i’m sure you’ve heard it a dozen times, when the rates drop, refinance!
A significant yet often overlooked point from the Fannie Mae survey is that 20% of respondents reported their household income is significantly higher than it was a year ago. If you’re among those whose income has increased, you might be in a better position to buy than you think.
Increased household income can help offset higher mortgage rates, making homeownership more attainable than it appears at first glance.
4) Supply
The so-called “lock-in effect” where homeowners are reluctant to sell due to their existing low mortgage rates is starting to wane. The survey suggests that some homeowners may need or want to sell for reasons beyond finances. This could lead to an increase in housing inventory, which, coupled with lower competition, could make it an excellent time to buy.
It’s crucial to remember that real estate markets are cyclical. While current sentiment is low, it’s likely to rebound as the market adjusts. Those who buy now, during a period of low sentiment, may find themselves in a favorable position when the market sentiment shifts.
Buying a home is a long-term investment, and timing the market perfectly is nearly impossible. What you can do is make a well-informed decision based on your personal circumstances and the broader market trends.
While the Fannie Mae Home Purchase Sentiment Index reflects a grim outlook among consumers, this doesn’t mean you should shy away from buying a home. On the contrary, now could be an opportune time to enter the market. By educating yourself, understanding market dynamics, and considering your financial situation, you can make a strategic decision that benefits you in the long run.
If you’re thinking about buying, don’t let the current sentiment deter you. Instead, seize the opportunity to buy while others are hesitating.