Don’t Wait for the Housing Market to Crash
For would-be homebuyers unfortunate enough to be in the pre-pandemic game, the hope of a housing market crash may be the only thing to grab onto next month after a month of rising prices and fast sales. We think that maybe prices will bottom out, which will suddenly make homeownership more accessible and affordable.
Unfortunately, it is difficult to predict what will happen next. Today’s conditions are completely different from what they were before the 2007 housing crisis, so we can’t use that as a guideline. In fact, many experts believe that we will be in a seller’s market for some time: the supply of housing is still relatively low, and even if the price increase does not reach double digits, it is unlikely that it will reverse. Rising interest rates, which make borrowing more expensive, may cool things off a bit, but a crash is likely just around the corner.
This begs the question: if you want to buy, should you wait, perhaps months or years, and hope it gets easier? Or just go for it knowing what you can’t know?
There is no perfect time to buy a house
Of course, both approaches have their risks and benefits. As Joe Pinsker writes in The Atlantic , “determining the ideal time to buy is impossible because the ideal time only becomes clear in retrospect.”
For you, this means that if you are ready to buy and you can afford to buy and you want to buy, it might make sense to just go and buy. There may never be a “perfect” moment when low interest rates, stable home prices, market supply, and your financial and emotional readiness come together.
Buying in a hot market comes with risks, but waiting can also be a gamble: you can overvalue yourself with rising prices and rising interest rates, and lose the chance to buy the house you really want now. So instead of trying to strategize or play the market, consider buying a home just like buying a home, especially one that you plan to stay in for a while.
From Pinsker:
Herbert recommended a different approach to home buying timing that I found much more comforting. “You should take this as a housing decision, not an investment,” he said. If you buy a house, he advised, it should be because you want to live in it for at least five years, and ideally more, which will also mean that even if prices fluctuate, you will be more likely to the attachment. appreciate over time. “The longer you stay in the house, the [less] your time in that particular house price cycle will matter,” he said.
If you decide to go into battle, you still need to be mindful of the financial implications. Don’t go for more than you can afford, and don’t necessarily forgo contingencies that will protect you, the buyer, from a bad deal. There are certain things you can do to get a good deal in a hot market .