First-Time Buyers

Is Buying a Home in This Market a Good Choice?

October 1, 2023• 7 min read

People ask these questions constantly: Is now a good time to buy? How can I qualify? I don't have a down payment. The market is going to crash. I'll buy when prices drop.

These are all legitimate concerns, especially in a high-rate environment where purchasing power has dropped by nearly half and monthly mortgage payments have risen sharply compared to just a year ago. But with the right knowledge, a sound strategy, and good advisors, it's still entirely possible to build significant wealth in this market.

What's Actually Happening in the Market Right Now

The Federal Reserve's decision to raise rates was deliberate — a calculated effort to slow the economy and fight inflation. Right or wrong, it worked. Regular buyers were largely priced out. People who would have qualified for a $600,000 home at the beginning of the year now qualify for $300,000–$350,000 with the same income. And when regular buyers disappear, fix-and-flip investors follow — because their customers (retail buyers who fall in love with renovated properties) are also gone.

So who is buying? Long-term investors and institutional buyers. They're purchasing substantial amounts of property, particularly in this type of market — where homes sit longer, competition from retail buyers is reduced, negotiating room is wider, and financing terms are often more favorable for experienced operators.

If you have the right mindset and clear goals, you can access the same opportunities. The market isn't hostile to everyone — it's just sorted out different categories of buyers.

The First-Time Buyer Advantage

First-time buyers have genuine advantages that most people underestimate.

You can access down payment assistance programs. While not exclusively for first-timers, being a first-time buyer makes you eligible for more programs and better terms. You can purchase with as little as 3.5% down (FHA) or even 0% in certain programs.

You can house-hack — live in one unit or room and rent the rest. If you buy a property with extra bedrooms, renting them reduces your effective monthly housing cost. In the right situation, you can live for very little or even net positive cash flow from day one.

You can add value. Buying a property with untapped potential — a finished basement, an accessory unit, unused garage space — and improving it creates equity beyond what the market gives you.

Tax savings compound year after year. Between mortgage interest deductions, property tax deductions, and depreciation, homeownership produces meaningful annual tax benefits that renters never receive.

Even your down payment has optionality. In most cases, your first-year depreciation deductions alone can come close to matching your initial down payment in tax benefit terms.

How to Qualify When Your Purchasing Power Has Dropped

If rates have cut your qualifying amount in half, consider multifamily instead of single-family.

A 2–4 unit residential property qualifies for residential financing — the same loan types available for single-family homes — but the rental income from the other units counts toward your qualifying income. This means you can often buy more property than you could with a single-family purchase, and the additional units immediately begin helping you cover your costs.

You might not be in your ideal neighborhood on the first try. That's fine. Each extra unit means someone is helping pay your mortgage — essentially offering to cover half your debt. In the Boston area, you may not see positive cash flow in year one or two, but by year five or so, the picture typically shifts substantially in your favor.

And when rates eventually decline — which they will — you can refinance and improve your monthly cash position.

What About PMI?

Private Mortgage Insurance is required when your down payment is less than 20%. Most people treat it as a reason to delay buying for years until they've saved a full 20% down payment. This is usually a mistake.

PMI cancels automatically once your loan balance drops to 80% of the original purchase price through your regular payments. It can be eliminated faster in two ways:

Making extra principal-only payments each month — even $200–$500 extra — accelerates the timeline significantly and saves a substantial amount of interest over the life of the loan.

Adding value to the property. If improvements you make increase the appraised value, your loan-to-value ratio improves accordingly. Once you're at 80%, refinance — use the excess equity as your down payment on the next property.

PMI typically costs 0.5–1.86% of the loan annually. Your tax benefits, depreciation, and appreciation together will almost certainly exceed that cost each year. You can also calculate your total PMI exposure over five years and negotiate that amount into your purchase price as a seller concession. On a $500,000 purchase, a 1.86% PMI rate equals $9,300 per year. A $50,000 price reduction covers five years of PMI costs entirely.

Why Sellers Negotiate Now

Seller motivation varies significantly. Some have no flexibility — their equity doesn't allow it. But many sellers today are more willing to negotiate than they were 8–9 months ago. The two biggest buyer categories (retail purchasers and flippers) have largely exited the market, properties are sitting longer, and fewer buyers are competing for each listing. Sellers know this.

In this environment, you can often negotiate price reductions, seller concessions toward closing costs, and in some cases, seller financing of your down payment for a set period.

The Right Mindset

The most important shift isn't financial — it's perspective. If you approach this as a regular buyer trying to purchase the most expensive asset of your life, you'll feel the market's weight. If you approach it as a landlord trying to build a long-term asset, the same market looks different.

Regular buyers lock themselves into 30 years of liability. Landlords build assets that compound over the rest of their lives.

Not every agent can guide you through this. Look for what the industry calls an "investor-friendly agent" — someone who invests in real estate themselves, who understands the numbers rather than just the aesthetics, and who can help you see opportunity where others see problems. They're less common than general agents, but they exist, and working with one makes a measurable difference.

The market is not out of reach. It just requires a different approach than the one most people were taught.