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Buying A Home? Consider These Four Things First

What Matters Before Buying a Home

When buying a home, there are a few key factors that should guide every decision you make. The most important things for homebuyers to consider include:

  1. Being able to afford a home based on your current situation
  2. Not overpaying based on market value
  3. A home’s location, including neighborhoods and school districts
  4. The age of the home and its major components

Why Financial Security Matters When Buying a Home

Notice how security plays a major role when buying a home. It’s only natural to feel some hesitation—this is a significant investment. And that sense of security goes beyond just the financial commitment. Without it, moving forward with confidence becomes difficult.

It’s also worth noting that three of the four factors above directly tie back to money, making financial clarity essential before taking the next step.

Understanding Affordability Before Buying a Home

Affordability is the foundation of buying a home. If your current circumstances don’t support it, it may not be the right time to move forward.

What’s affordable for one buyer may not be realistic for another. It comes down to your ability to budget for every cost associated with the purchase.

Your debt-to-income ratio is one of the clearest indicators of whether you’re financially prepared. Lenders will evaluate your income, debts, assets, and liabilities to determine what you qualify for.

However, just because you’re approved for a certain amount doesn’t mean you should spend it. A sustainable mortgage should align with your long-term financial comfort, not just lender approval.

Avoiding Overpaying in Today’s Market

Another key part of buying a home is making sure you’re not overpaying.

Home values have risen significantly in recent years. Since the COVID pandemic, prices in the Greater Scranton market have increased by 54.8%.*

While opportunities still exist, buyers should approach the market thoughtfully. Consider how long you plan to stay in the home. If you sell too soon after overpaying, you could face financial setbacks.

As a general guideline, planning to stay in a home for at least seven years can help reduce the risk of loss. While real estate is often a strong investment, there are no guarantees.

How Location Impacts Your Home Buying Decision

For many buyers, location is the first and most important filter.

Even if a home checks every box, its location can make or break the decision. School districts, commute times, and nearby amenities are all important to think about.

When buying a home, consider:

  • Distance to work, school, and daily essentials
  • Traffic patterns and noise levels
  • Neighborhood atmosphere during different times of day
  • Walkability and overall community feel

Since you can’t change a home’s location, it’s worth evaluating this early in your search.

Evaluating the Age and Condition of a Home

Most buyers aren’t purchasing new construction. That means understanding a home’s condition is essential when buying a home.

A home inspection should always be part of the process. It provides insight into the condition of major components like:

  • Roof
  • Windows
  • HVAC systems
  • Foundation

As homes age, repairs and maintenance become more common. Knowing what to expect can help you plan for future costs and avoid surprises after closing. Call in professionals, like a reputable home inspector. They’re more than capable of assessing the age of a house’s components and appliances.

A few decades after the construction of a home, repairs become more common, and as a prospective buyer it’s important to understand what your yearly maintenance and repair costs might look like.

* Greater Scranton Board of REALTORS® stats; median home sales for March 2020, October 2022

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Top 3 Reasons To Purchase A Home

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The later part of this year might bring about some stabilization in the way of a more balanced market, but don’t expect one favoring buyers anytime soon. As inventory shortages continue, and they will, prospective homebuyers are attempting to determine if they should stay in the game. Others have doubts and aren’t sure if they should join the quest for homeownership either. There are many reasons to purchase a home, and now is a great time to start planning.

The anticipation of homeownership can be intoxicating for some. Recent months have been a prime example of this in our region of Northeastern Pennsylvania. With homes sold on par with the previous year (843 versus 853, respectively), and inventory struggling to see the light of day (1.29 month’s supply), there’s an element of hysteria to real estate transactions these days. Certainly, the pandemic was a catalyst for the surge in activity, but make no mistake about it, our housing supply had already been depleted prior to 2020.

WReasons To Purchase A Home That Might Not Be Ideal

Before we reveal why now is a good time to buy, there are a couple reasons we caution some to re-evaluate their situation before purchasing a home. These reasons include those facing upheaval in their lives, those who must remain nomadic for the sake of their job as well as anyone who struggles to cover their monthly expenses.

If your life is a little frantic today and you’re going through transitions, purchasing a home might not be the best course of action. If you’ve undergone more change than you care to admit, renting may provide you more freedom and less stress. It’s also favorable for those who need to move promptly due to work. Homeownership can only create headaches for these successful itinerant types, who could potentially sit on the sidelines waiting longer than expected for their home to sell.

Finally, owning a home comes with maintenance, presumably a mortgage, taxes, insurance and occasionally other fees or costs. If you presently grapple with covering your expenses and debt, purchasing a home isn’t a path you should pursue until your situation changes for the better.

Obviously, renting in particular situations just makes sense! Doesn’t a seller’s market, the likes of 2022, qualify as one of those instances? Not necessarily. In fact, since the “lockdown dam” ruptured in June of 2020, rents have been rising too.

Reasons To Purchase A Home Now That Make Sense

Yes, glaring issues in our economy such as inflation, the increasing costs for food and gas, among others, create barriers to buying (we can’t minimize them), but opportunities exist for those looking to enter the market, especially for the first time. They remain even in the midst of a supply shortage.

Homebuyers, now is the perfect time to pursue homeownership, especially if you don’t need to sell and your rental rates are continuing to climb. Purchasing property is advantageous, and in the majority of cases, will be the smarter play over leasing. Here are the top three reasons why buying your first house (or likewise, continuing to own one) now makes sense.

1. Stability

Because the landscape for buying and selling is more volatile recently, having a meticulous plan of approach is essential. Before you commit to taking on a mortgage, understand your finances and prepare them appropriately. The first step toward investing in your future in real estate is stability.

If you’re grounded in your finances, with trace amounts of bad debt in your name, and you have the ability to afford a home at a particular price point in addition to the closing costs that are associated with it, you’re in a good position to invest. If you have a nest egg or emergency fund, you’re in a superb position. Of course, having excellent credit gives you a competitive advantage and firmer stability still.

2. You’ve Been Squandering Your Extra Money

If you’re looking for safer places to store your loot, you should strongly consider building equity by purchasing a home. Homeownership forces you to produce equity. On the other hand, renting makes it easier to spend your extra cash rather than invest it. The money you’re putting into a home will come back to you as your property appreciates over time.

In 2021, we witnessed homes appreciate by roughly 19% and they should sustain 5-10% through year’s end. Housing appreciation in the Greater Scranton area registers 13.1%, year-over-year for April.* According to the latest numbers from CoreLogic from March, homes have appreciated by 20.9%, year-over-year. It’s a great time to make an investment in a home!

3. Feel At Home

As a result of owning property, you can create something that’s truly yours. Would you like to renovate? You can. [Make sure to check with your local municipality or borough first.]

Want a bigger say in lifestyle decisions? Make them for yourself and your family. Need increased privacy? You’re in the driver’s seat. You can make additions to your property to make it more secure. You can erect shrubs and fences. Alter the landscaping or design of your residence, because you can – you’re captain of this ship. Don’t worry about the logistics! Homeownership means less restrictions and limitations and more freedom.

Why not own a place you can call home, when it’s all said and done? As a prospective homebuyer, especially a first-time one, you have the ability to invest in your family and create a foundation to build on, for their stability too.

What’s more, homeownership statistically creates a better environment for children. There are many intangibles produced when a child has a safe and affordable place to live. Furthermore, homeownership drives your local economy and has the potential to enhance your community. For every two home sales, one job is generated, increasing economic mobility.

If you’re looking for housing, don’t give up hope. Our region might be slightly oversaturated with buyers, but that continues to improve. What we can expect six months from now is anyone’s guess, but we’re approaching a more balanced market in the months ahead.

At the moment, it’s a great time to buy, and if you’re in the position to do so, will you take the steps necessary to join those who find homeownership very rewarding?

* statistics from the Greater Scranton Board of REALTORS®

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