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Should I Wait For Home Prices to Fall Before Buying? – NextAdvisor

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Home prices are higher than they’ve ever been, and they show no signs of stopping. 

The median U.S. home listing price was $405,000 in March 2022, the first time it’s broken the $400,000 price threshold, according to data from Realtor.com. That is an increase of 26.5% over two years. 

Homebuyers might see similarities between what’s happening today and the 2006 housing market where home prices became increasingly unaffordable until the bubble burst, helping trigger the worldwide financial crisis we came to call the Great Recession.

Stressed-out buyers might be thinking these high prices are a bubble just waiting to pop again. In fact, 77% of homebuyers believe there’s a bubble where they live, according to a recent Redfin survey. 

Today’s market differs significantly from what happened 15 years ago, when high home prices were instead driven by loose lending practices and rampant investor speculation in the market. 

Waiting for the market to crash might not yield the results buyers hope for, experts say. “There’s not really any room for there to be a bubble right now. It’s not like people have borrowed too much and it’s not like homes are overvalued,” says Daryl Fairweather, chief economist at Redfin. 

There are a lot of reasons why it seems like we are in a bubble, but at its heart, the issue is simple: supply and demand are driving up prices. “It’s just that there aren’t enough homes for everybody who wants one,” says Fairweather.

Here’s what is different about today’s market, what’s behind the record-high prices, and what buyers can do to navigate the process. 

Things Have Changed Since 2006

The current market and that of the mid-2000s share some similarities. Namely, housing prices were up and often unaffordable for buyers. The causes are different, experts say.

The previous bubble came after a period in which lenders were more lax about writing loans and more people were in the housing market as an investment rather than to buy a home to live in. “Mortgage underwriting was considerably more loose back in 2006,” says Robert Dietz, chief economist at the National Association of Home Builders. “It was easier to get a mortgage to speculate in the housing market. That is not the case today.”

Different home loans, such as adjustable-rate mortgages with big “balloon payments” due at the …….

Source: https://time.com/nextadvisor/in-the-news/dont-wait-to-buy-a-home/

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