First-Time Home Buyer Advice: Fourth Quarter 2024

Through much of 2024, many potential home buyers labored in the housing market, biding their time until conditions improved.

The fourth quarter brings a more welcoming environment with mortgage rates downtrending — aided by the Federal Reserve’s big September cut — slowing home price growth, and increasing inventory. In most of the country, it’s the peak time to buy a house.

Being prepared is a major key to becoming a homeowner. So is talking to people in the know. The Mortgage Reports spoke with six industry experts to see what advice they’d give to first-time home buyers heading into 2025.

In this article (Skip to…)

• Uniqueness of the current marketplace
• Top advice for first-time home buyers
• Time to restart your house hunt?
• Who does your local market favor?

Expert advice for first-time home buyers

The housing market can be a tough and sometimes confusing place to navigate — especially for first-timers. Home buying conditions are in a constant state of flux, shifting over time and by geography.

To shed some light and (hopefully) make matters easier, The Mortgage Reports got insights from six experts in the field to help borrowers in the fourth quarter. Answers have been edited for brevity and clarity.

What is special or unique about the current home buying marketplace?

Nick Boniakowski, head of agent partnerships at Opendoor:

Since the mid-2020s we’ve experienced a rather substantial seller’s market. But due to rising home prices and elevated interest rates, we’re now seeing a more neutral market where buyers and sellers are on somewhat equal footing. One signal of this shift is the recent surge in delistings — or removing a home from the market after it has been listed for sale. In the first half of 2022, more than 70% of homes sold at or above list price — a clear indication of a seller’s market. In 2024, an Opendoor report found only about 55% of homes sold at or above list price in the first half of this year — signaling a market where buyers are gaining more negotiation power.

Additionally, mortgage rates may see a modest decline, given the recent half-point rate cut at the September Fed meeting. While the Fed doesn’t directly set mortgage rates, a change in borrowing costs typically has an impact across other markets, including real estate. The Fed has also signaled that there may be more cuts in the future, which means there may be more relief for buyers on the horizon.

Ralph DiBugnara, president at Home Qualified:

The current real estate market is unique because most homeowners have significant equity in their homes from the last few years’ appreciation, and low mortgage rates. This makes them less likely to sell or refinance, so it slowed movement in an economic environment which was already short of homes for sale.

Mark Fleming, chief economist at First American:

Low inventory and low affordability. High mortgage rates are a double whammy for the housing market – locking in homeowners, the primary source of for-sale housing supply, and reducing house-buying power.

Renee Gaugler, loan officer at Cornerstone Home Lending:

This has actually been my favorite buying market over the 20 years I’ve been in the industry. Rates have come down a little, which helps affordability, but not enough for a large number of buyers to flood back into the market. This means that most buyers are actually often able to look at multiple houses and not have to immediately submit an offer that’s competing with 27 other offers like what was happening a few years ago.

Buyers also have more negotiation power than they’ve had recently — I would say about 75% of my transactions have some sort of seller concession, whether that’s a price reduction or seller-paid closing costs and/or interest rate buydown. I also feel like most markets are seeing inventory levels come up a bit, so that means there are actually more options to choose from. More options, lower rates, more negotiating power, and less competition is a win for buyers.

Hannah Jones, senior economic research analyst at Realtor.com:

Today’s housing market is more buyer-friendly than in the past couple of years, but is still quite challenging. Building supply and waning demand mean that buyers are in a relatively favorable position in many areas, but affordability is likely still an obstacle.

Mortgage rates have fallen more than 1.5 percentage points from their multi-decade peak in October 2023, and for-sale inventory was more than 30% higher year-over-year in August. Though still lower than pre-pandemic, burgeoning home supply means buyers have more options than at any point since May 2020. Home prices also fell slightly year-over-year in August and market pace continued to ease. However, despite these buyer-favoring developments, the combination of home price and mortgage rate growth means that the typical monthly housing payment was 54% ($739) higher in August 2024 than in August 2019.

Steve Miller, branch manager at Embrace Home Loans:

The current housing market is certainly not dealing us a great hand in terms of inventory. Many local markets are experiencing sub two month inventory levels that are making it very difficult for active homebuyers to find ‘the right home.’ And when they do, we are still experiencing competitive situations with limited contingency opportunities accepted on contracts.

What’s the top piece of advice you’d give to first-time home buyers in 2024’s fourth quarter?

Boniakowski: I advise first-time buyers to focus on their specific budget and needs rather than external factors, like mortgage rates. Creating a budget for a first home can be overwhelming, so I recommend starting with the 28/36 rule — spending no more than 28% of their monthly income on housing, and no more than 36% on debts. Buyers can use the 28/36 guideline to define their ballpark budget and shop for homes and mortgage loans within those ranges. Mortgage calculators are helpful for visualizing what those costs look like — though first-time buyers should also remember to factor in potential closing costs, fees, agent commissions, and any repairs that need to be dealt with post-close.

DiBugnara: Mortgage rates seem to be cooling which could cause increased competition and possible rising home prices. It’s important to know what you can afford and stick to a budget. Also, there is no true way to tell how long mortgage rates will stay low or if they will get there. Have a monthly payment you are comfortable with and stick to that no matter the price of the home or level of mortgage rates.

Fleming: One might assume the advice is to wait for rates to fall further, but if a potential buyer wants to become a homeowner, I suggest not trying to time the market.

Gaugler: The team you work with is everything. Make sure you choose a knowledgeable Realtor and lender you trust because it matters more than ever in this market. It’s not always about choosing the cheapest options either, because the cheapest doesn’t mean the best. The best way to shop is to see who you really connect with and who will be able to help you accomplish your goals.

Buying a home is very personal. You’re going to give your lender all of your income, asset and credit documentation, so you want to make sure that’s someone you trust and someone that does a great job answering your questions and explaining things in a timely manner. The same thing is true for your Realtor. You need someone who can help you understand the market in your area, find the right potential properties and has the expertise to write a competitive offer. This is not the time to work with your friend’s uncle who just got into the business.

The most important thing is to make sure you are preapproved before you start even casually looking at properties for two reasons — You want to make sure you can move quickly if you do find something. Even more importantly, if you start looking in a high price range and then find out you either don’t qualify or that you don’t like the payment, it’s really hard to go down in price range when you’ve already looked at the nicer homes. I’ve seen many buyers be heartbroken by doing this.”

Jones: Be prepared. Get to know the market you hope to buy in, keep an eye on available homes and their price levels, and set your expectations of what your budget can afford you. It is challenging to be a first-time buyer in today’s market, aiming to compete without the advantage of existing home equity that many repeat buyers have. However, first-time homebuyers can secure the best mortgage rate possible by taking a few key actions, such as shopping around and raising their credit score.

Miller: Having successfully navigated many cycles in the mortgage market for over 21 years, my biggest piece of advice for first-time homebuyers is to make sure you educate yourself. It’s not about finding the lowest interest rate, lowest down payment product, and lowest fee structure you can obtain. Rather, it’s about connecting with a true mortgage professional who is interested in taking a deeper dive into understanding your financial goals, your housing needs, and any other financial components you have that may be challenging for you as a buyer, such as student loans and consumer debts. It is important to remember that when you dive into the journey of homeownership, it’s an opportunity to create long-term wealth. Your home will become the foundation of your financial portfolio and not just a roof over your head. The right professional in your corner matters!

For those priced out on the sidelines, should they restart their house hunting this quarter or continue waiting (and why)?

Boniakowski: Given the Fed’s September half-point rate cut, we expect that mortgage rates may see a slight decline — though it will likely be modest. Still, the Fed has signaled that there may be more cuts in the future, so more buyers may come off the sidelines. In fact, an Opendoor survey revealed that 50% of people say an interest rate of 6.5% or less would prompt them to look to buy a home, while 29% would prefer the rate was 4% or lower. More buyers means more competition, and tips the negotiating power back into the hands of home sellers.

Ultimately, though, there is still a lot of uncertainty in the market, which is why buyers should focus on what’s right for their family and their financial situation, rather than try to predict economic shifts. They should shop for the best rates and for the homes they can currently afford — they can always refinance later on better terms if they become available.

DiBugnara: For those homeowners who have been sitting and waiting, after being priced out, now is a great time to start a search again. Money will be cheaper to borrow, but long term that could mean a rise in home prices. Before that happens, potential buyers should get out and look again.

Fleming: If you can find a house you like — not a trivial task in a supply-constrained market — you can always refinance later if rates come down further and you will have the benefit of home appreciation in the meantime.

Gaugler: I have noticed more affordable options being available in my market. Sometimes I think people like to focus on “median” prices, and Realtors like to post fancy high-end properties. That can scare people off and make them think there’s nothing affordable out there. But now is the time to check again since there are some surprisingly affordable options. Plus, rates have actually come down quite a bit.

I would advise buyers to speak to a great lender and see how you can get creative. I’ve had some clients who were able to create affordability by having the seller give a credit for a large interest rate buydown to make the payments affordable. If you strategize this upfront, your lender can help your Realtor craft an offer to make that work for the seller, too.

Jones: The fall introduces housing market dynamics that make it a great time to buy a home. The summer’s leftover inventory is still on the market, many home shoppers have either already purchased or have shifted their attention elsewhere (i.e. back to school, holiday festivities), market pace slows, and price reductions climb. Once-priced-out home shoppers who can now afford to buy a home can take advantage of these dynamics and snag a home this fall. It is challenging to try to time the market, so buyers should feel confident moving forward with a home purchase if the right home hits the market at the right price.

Miller: I’m very hopeful for these folks. They battled some of the most challenging times we had in securing properties while rates were at the lowest points ever and the competition was at the highest level we’ve seen. Their dreams of homeownership never left and I’m happy to share that the light can be seen at the end of the tunnel.

It’s hard to speculate what exactly will play out in terms of affordability with rates and values, but we are certainly in a better place today than we were over the last 18 months or so. With future rate drops expected, the next few months will create opportunities for folks to jump back into the market. There is still time to get ahead of the rising home prices that will naturally come with lower rates and give them the ability to gain some equity as time goes on. We also suspect that the falling rates will create more inventory as current homeowners will be more likely to give up their low rate mortgages for a more “acceptable” rate, as the markets are predicting.

What’s a good way to tell if your local housing market favors buyers or sellers?

Boniakowski: While the housing market can be unpredictable, you can determine if the local market favors buyers or sellers by analyzing trends like delistings, speed of home sales and the number of active shoppers. Are prices increasing or decreasing in the area? If prices have been growing over several months, that’s a seller’s market — indicating buyers are willing to meet sellers where they are. You can also look at available local inventory. A balanced market, favoring neither buyers nor sellers, generally has several months of inventory. If there’s a surplus of inventory, the market favors buyers, and if there’s scarcity, the market favors sellers. Keeping a pulse on the nuances of the market helps any homeowner make more informed decisions.

DiBugnara: A good way to gauge the local market is if homes are staying on market a long time, and/or having price drops, these are signs of a buyer’s market. If open houses are full, homes are selling in less than 30 days with multiple offers and bidding wars are normal, you are experiencing a seller’s market.

Fleming: The best way to tell when you are in a buyer’s or seller’s market is if you are competing with others to purchase a house. Many competing bids indicate a seller’s market — the seller gets to choose who they sell to. Zero, or only one or two bids, and the buyer is in control.

Gaugler: The best way is to connect with a really good Realtor. They know the market better than anyone and can really help you with that. Another way to determine this is to look at online home listings. If you see a lot of properties showing “price reduced” or showing more than 45-60 days on market, that’s a good indicator that it’s more likely a buyer’s market. If the only properties available have been on the market for just a few days and there isn’t a lot of inventory to choose from, then that’s an indicator of more of a seller’s market.

Jones: Buyers can get a sense of buyer-friendliness by using a site such as Realtor.com and taking stock of how long homes are sitting on the market, how many homes are seeing price reductions, and how many homes are for sale. Markets that are leaning more buyer-friendly will likely see ample inventory, longer time on market, and more price reductions. Shoppers can also rely on a local Realtor to guide them on how flexible sellers may be according to what they are seeing in the market.

Miller: In general, when you have a market that is serving up a low supply of inventory, this usually indicates a sellers’ market. However, if you notice a particular community or region that is seeing properties on the market for more than 30-45 days, this could be an indication where buyers have the ability to secure a home with contingencies such as inspections, appraisals, and financing that allows them a period of due diligence prior to settling. In some unique circumstances, it may also create opportunities for buyers to achieve seller subsidies or financial concessions to offset their closing costs.

The bottom line

Buying your first home could be as daunting as it is exciting. But preparing yourself and heeding advice from professionals can help you navigate the housing market.

If you’re ready to begin your path to homeownership, find a local lender and real estate professional you trust to get started.