Is it a good time to buy a house? An economist’s advice on when to do it.| Expert Opinion

For most families, a home is the most important purchase of their lifetime. Owning and maintaining a home is far and away the biggest cost in their monthly budget, but their home is also their biggest asset and thus critical to their retirement and overall financial well-being.

For the two-thirds of Americans fortunate enough to own their home, it has been an excellent investment. The typical family stays in their home about a decade, and over the past 10 years, nationwide house prices have almost doubled. Philadelphia homeowners have enjoyed a similar gain.

This is an extraordinary return, but it is eye-popping for families who took on a mortgage to buy the home. Consider the family who put up a standard 20% down payment on the home it bought a decade ago. That investment is now worth nearly five times as much. To put this in context, an investment in the rip-roaring stock market through, say, an S&P 500 fund, would have increased “only” about threefold over the same period.

Unfortunately, purchasing a home in recent years has become a financial stretch too far for most potential first-time homebuyers. This is partly because of the big house price gains over the past decade, particularly during the pandemic, when cooped-up city dwellers were excited to pay for a home with more space.

Mortgage rates have also risen. At the height of the pandemic, the rate on a 30-year fixed-rate mortgage fell to an all-time low of well below 3%. Rates have since doubled, and are now hovering just over 6%.

The mortgage payment on a typically priced home at the current mortgage rate is about $2,300 per month, about double what it was prior to the pandemic. This compares with a nationwide average rent of $1,700 per month. That’s too big a difference in monthly payments for most families to stomach.

And even if families could afford the monthly mortgage payment, they don’t have many options to buy. There aren’t many homes for sale. This is a result of what is being called interest rate lock, as the majority of existing homeowners have mortgages with rates that are well below the current 6% rate. If they sell their home and buy another, they will need to pay off their existing low-rate mortgage and take out a higher-rate mortgage. That doesn’t work for most homeowners, and so they aren’t selling.

Despite all these hurdles, if you’ve been contemplating buying a home, this spring may be the time to at least begin the process. There’s no rush, but waiting another year or longer likely won’t make a purchase much more affordable.

House prices are no longer rising as quickly due to affordability-constrained demand. In some parts of the country, especially the South and West, where more new homes are being built, prices have actually slumped a bit.

Mortgage rates are about as low as they are going to go. Of course, rates change with economic conditions, but cutting through the volatility, at 6%, they are approximately where economists would expect them to be. That may be hard for many would-be homebuyers to get their minds around, given how low rates were in the years leading up to and during the pandemic, but those years were the exception and not the rule.

Also, while the number of homes for sale is low, it is on the rise. Life events — think new children, divorce, empty nests and death — have left more and more families living in homes that are no longer suited for their needs. Families whose demographic makeup is changing can live in unsuitable homes only for so long and, at some point, will list their homes and move despite any financial hit. And many families are closing in on that point.

Whether it may soon be a good time to purchase a home also depends on future house price growth. A prudent homebuyer would assume annual house price appreciation in the low single digits over the next decade. This isn’t the torrid pace of growth over the past decade, but with these kinds of gains, a home will still be a good investment.

Of course, house price growth will vary considerably across the country, and I’m even more optimistic about the future of Philadelphia house prices. Don’t look now, but the region’s economy is creating lots of jobs, thanks to its large and thriving healthcare industry. Only a handful of other metropolitan areas across the country are creating more jobs. And this should continue, given the nation’s aging population and mounting healthcare needs. More jobs mean rising incomes, which is the fodder for house price gains.

Being a homeowner is critical for the financial future of most American families. Becoming one in recent years has been prohibitively difficult. It’s still tough, but a door may be opening. Given the opportunity, you should carefully consider walking through it.