This article appears in Real Estate Outlook 2018.

With interest rates on the rise and expected to climb higher, home buyers may be rushing to invest in a property before it gets more expensive to borrow money. That begs the question: Is now a good time to buy a house?

“With so many variables to consider, there are no cookie-cutter answers,” said Robert Solomon, clinical professor of law at University of California Irvine. “There is a housing shortage in many metropolitan areas and, when combined with foreign investment, housing is overpriced in many areas. The corollary is that there are other areas with higher vacancy rates and when combined with low interest rates, housing may be a bargain.”

Housing affordability is becoming a major concern in many markets, said Murat Arik, director and assistant professor of management in the Business and Economic Research Center, Jones College of Business, Middle Tennessee State University.

“If and when the Federal Reserve increases the interest rate, that will add an additional layer of burden for the potential home buyers,” Arik said. “Although there are significant regional variations in the housing market and what is unfolding in certain parts of the economy, the strong economic fundamentals suggest that it may still be a good time to buy.”

There’s really no straightforward answer.

“On one hand, current mortgage interest rates suggest it is still a good time to buy. On the other hand, looking at the broader market, there are several discouraging factors for potential buyers,” Arik said.

Negatively affecting the home-buying decision is that home prices are growing faster than wages, Arik said. Additionally, home prices will continue to grow even faster because of several pressures, including low housing inventory and increased demand from various population segments, Arik said.

Political factors unfolding in the country may also impact overall sentiment across the economy on housing-related activities, Arik said. These include “increasing market volatility, increasing lumber prices, increasing tariffs on steel and aluminum, impact of tax overhaul and potential trade war over the expected tariffs on steel and aluminum,” he said.

Indicators to watch

At least four aspects of the economy are worth watching when considering whether to buy a home, said Donald Haurin, professor emeritus in the Department of Economics at Ohio State University. They include:

1. The Federal Reserve’s and experts’ comments on the expected changes in mortgage interest rates or the 10-year bond. Do they predict it will rise by a percentage point or more?

2. Indices of current house price changes. Are they remaining strong? If yes, investment value of house remains high.

3. The average time on market of local houses. If it is rising substantially, the local housing market is likely slowing. This suggests that house prices will not increase as much as in the past two years, reducing the investment value of ownership.

4. Indicators of the health of the local economy, such as the local unemployment rate. A strong economy suggests the housing market will remain strong.