Yes, you should buy a house right now

You can't time the housing market.

That statement, on the surface, seems like it's wrong, but over 50 years of sales data suggest broadly that the right time to buy a house is always now. Housing prices, of course, vary by market, but on a national level, they have climbed steadily since the 1960s, according to data from the St. Louis branch of the Federal Reserve.

Mortgage rates, which have basically doubled from 2.9% a year ago to 5.89% as of Sept. 8, are a factor, but waiting for rates to drop is a dangerous game. If mortgage rates do fall, more people are likely to end up back in the housing market. That will push prices higher.

Housing is in most cases, not an optional purchase. Unless you have someone willing to give you a place to live free of charge, your choice is renting or buying a home, and as housing prices climb rental rates generally move in the same direction.

"Median rent in the top 50 metropolitan markets hit a record $1,849 in May, up 15.5% from a year earlier, according to Realtor.com, a real estate services firm. It was the 15th straight month of record rent," TheStreet's Dan Weil wrote in July.

Put simply, if you need a place to live, and expect to stay put for at least a few years, buying makes more sense than renting.

TheStreet

Housing Prices Go Up

As you can see on the chart above, housing prices move steadily higher. Yes, there are periods where they dip and individual markets may vary but the right time to buy a house has historically generally always been "now."

Mortgage rates are a factor, but they are also relative. The current rate hike has slowed, if not stopped, rising prices in many markets. If we see lower rates, even a few years from now, that would be a catalyst for prices to rise again.

It's important to understand the impact of mortgage interest rates on your potential payment. If you borrow $300,000, here's what you would pay per month at a variety of interest rates

3%: $1,2654%: $1,4325%: $1,6106%: $1,7007%: $1,996

That's a $435 per month difference between where rates were a year ago and where they are now (more or less). The added cost certainly factors into how much you can spend on a house, but it generally does not mean you should not buy a house.

A Personal Look at Buying a House

During the pandemic, my wife and I sold our downtown condo, used the proceeds to buy a resort condo/rental property, and moved into a rental. When we moved to the rental -- a move forced by needing to stay on my son's bus route for his last year-and-a-half of high school -- we were paying $2,495 a month for a 2,600 s.f. 4-bedroom townhouse in a community with a nice pool and a gym.

That number was around what our costs were in the condo we owned previously, but we weren't building equity or gaining any appreciation. In year two, our rent went up to $2,700 a month and that's when we began looking for a home.

Ultimately, we decided we could not afford what we wanted (a 3-bedroom, single-family home) in the South Florida area where we lived, so we began looking about 40 minutes north. Ultimately, we found a home in a nice community with similar amenities to what we were leaving and bought a 3-bedroom, 1,600 s.f. single-family home for $315,000, putting 20% down.

And while we downsized a bit, we had never needed as much space as we had in the rental, so having a yard, a garage, and a nice screened-in lanai seemed like a fair trade-off. We got in before interest rates spiked our mortgage is at roughly 4% making our monthly payments, which includes about $400 in homeowners association fees as well as our insurance and tax escrows about $2,1,00 a month.

That's $600 a month less than we were paying to not own a home (and $1,900 a month less than what our previous landlord got from the next tenants). If we had waited a few months and paid 6% interest our payment would have gone up $330 per month (and our cost to buy would have been higher as prices keep climbing).

So, now, instead of renting where costs would almost certainly rise on a year-to-year basis we're building equity in a property in a community where prices are likely to climb. We, of course, face added costs like repairs and improvements (we redid the entire house), but we own our home and that gives us an asset that should build our wealth over time.