Think Twice Before Waiting for Lower Home Prices: Simplifying The Market
The housing market is always in flux, and many potential homebuyers are wondering where it will go from here. Home prices, in particular, are a factor that many people are keeping an eye on. After reaching their peak in June of last year, prices have come down a bit. However, rumors are swirling that prices will soon crash, leaving many people waiting to buy a home until prices drop significantly. But is this the best strategy?
A recent survey conducted by Zonda found that 53% of millennials are still renting because they are waiting for home prices to come down. However, the latest data shows that home prices have bottomed out and are now on the rise again. Selma Hepp, Chief Economist at CoreLogic, reports that “U.S. home prices rose by 0.8% in February . . . indicating that prices in most markets have already bottomed out.”
The graph below, from Black Knight, shows a comparison of home price trends in November and February:
The data clearly shows that home prices are increasing in most markets, not decreasing. Moreover, the latest data from the Home Price Expectation Survey indicates that experts predict home prices will continue to rise steadily and return to more normal levels of appreciation after 2023.
Waiting for prices to drop significantly could be a mistake. If you factor in what the experts are saying, you probably shouldn’t. Instead, it may be time to act quickly if you’re considering buying a home. However, the best way to understand what home values are doing in your area is to work with a local real estate professional who can give you the latest insights and expert advice.
Here are some factors to consider before you decide to wait for lower home prices:
Home Prices Are Already On The Rise
As we saw in the Black Knight graph, home prices are already on the rise in most markets. Waiting for prices to drop could mean missing out on a good deal or being priced out of the market entirely. Experts predict that home prices will continue to increase, which means that if you’re waiting for lower prices, you may be waiting a long time.
The Cost Of Waiting
Even if home prices do decrease, waiting for them to do so could be costly. The longer you wait, the more you’ll spend on rent or other housing costs. Additionally, if you’re financing your home purchase with a mortgage, waiting too long could mean paying more in interest rates. By acting sooner rather than later, you could save a significant amount of money.
Opportunity Costs
Opportunity cost is the cost of forgoing one option for another. If you’re waiting for home prices to drop, you’re forgoing the opportunity to invest in a home now. This means that you’re also forgoing any potential benefits that come with owning a home, such as building equity, tax benefits, and the ability to customize and improve your home to fit your needs.
Real Estate Market Cycles
The real estate market is cyclical, meaning that it goes through periods of growth and decline. While prices may fluctuate, history shows that they tend to appreciate over time. By waiting for prices to drop, you could be missing out on the opportunity to invest in a home during an upswing in the market cycle.
Waiting for lower home prices could be a risky strategy. The data shows that prices are already on the rise in most markets, and experts predict that they will continue to do so. Waiting could mean missing out on a good deal, paying more in rent or housing costs, forgoing potential benefits of homeownership, and missing out
