5 Reasons You Should Still Buy a House Right Now

·5 min read

It's a seller's market for homes all around the country right now. People are going into bidding wars and home prices are coming in well above asking. If you're considering buying in the 2021 housing market, it's only reasonable that you might be intimidated. But have no fear: There are great reasons to continue house hunting.

Interest rates are still low, there's more inventory available than you might think, investors can get in on the 1031 exchange (while it still exists), and there are deals out there for future landlords and house hackers. Don't let fear keep you from finding the perfect house this year. Ahead, real estate agents share the top five reasons why you should still buy a house—yes, right now.

Rob Cardillo

1. Interest rates are low.

"Rates are still historically low. If you purchase a home right now, you will be paying less to borrow more money," says Sayeeda Moore, a Re/Max Agent in Cranford, New Jersey. Wells Fargo is offering 2.875% on a 30-year mortgage, and NerdWallet says the national average is around 2.838%. According to mortgagereports.com, in 1981 that figure was 18%—and just twenty years ago it was around 7%.

While the percentage has been dropping over the past 40 years, no one expects rates to stay this low forever. In fact, forecasters are hedging their bets and making their best predictions as we speak. Many expect a hike over the next 12 months. Even a 1% increase over 30 years could mean tens of thousands of dollars go to your mortgage lender rather than into your kid's college fund or your retirement accounts. This is about as close to "free money" as mortgages are expected to get.

2. There are lots of houses for sale.

For many years, agents lamented that there just wasn't enough inventory. This means that all the people who owned the most coveted houses in favored neighborhoods were staying put. These days, however, teleworking policies have created geographic freedom; homeowners are now unanchored. They are exercising their options to cash out on their beloved homes to try out lower cost-of-living cities.

"Although we are facing a housing shortage, the number of homes for sale is increasing, which means more choice for potential buyers," says Natasha Tomlinson, who has been an agent in Arizona since 2005.

More choice is a good thing. Buyers can be picky about finishes and features that they would have likely been stuck with if they bought a home just a few years ago. Now, real estate agents can find the perfect house for their clients—because there are a lot more houses to choose from.

3. Owning still beats renting.

"When renting, you're building your landlord's wealth," says Tomlinson. "Your monthly payment depends on rising rents, and you don't benefit from home appreciation. When you own property, you're building your wealth. Your monthly payment is locked in, and you benefit from appreciation." Homeownership—and the equity it brings—is still a key factor in wealth building for most Americans.

Saving up a sizable down payment to purchase a house might be difficult, but "the cost to purchase a home right now in some areas is lower than the cost of renting," says Moore. It is important to find the right mortgage rates and terms to lock in long-term savings that keep monthly payments low.

4. Buying lets you put down roots.

Wealth-building aside, if you plan to live somewhere long-term, it is always best to own. Renting can be precarious, even if the actual cost is predictable. How so? Rents can be raised at any time. Landlords decide if certain repairs are done immediately or delayed indefinitely. And in many cities, renters can be booted or billed for relatively minor issues. Ownership offers security and growth that renting simply does not.

If the cost of a home is within reach, agents say that it is best for people who see themselves growing old in one town to commit to buying their dream house or retirement home today. Inflation pretty much guarantees that waiting five or 10 years down the line will result in spending a lot more money for the very same house.

5. 1031s are still in play.

"There is no way to time the market, but in every real estate cycle, the argument can be made that there is always a good reason to buy or sell," says Moore. One of those reasons is called a 1031 exchange.

If you have a home that you're renting out, and you're scoping out buying something bigger or better, this capital gains tax deferment mechanism can help you make that upgrade. If you sell one investment property to buy another, this tax code might allow you to hold off on paying the taxes on the profit from the first sale until you decide to sell that second property. Many investors never plan to sell that second property, so they are able to quickly go from house-hacking in a single-family home to owning large-scale apartment buildings that they never could have afforded before.

The urgency to buy now is tied to news that the Biden administration is considering revamping the 1921 tax code to limit this deferment. While nobody can predict the future, aspiring real estate investors might want to make their move now. If the tax code changes, selling a small rental for a higher-value property or a commercial portfolio might become more costly.