Housing experts warn prospecting buyers from further delaying their homeownership plans in hopes of price depletion in this uncertain, economic market.
“Deciding to buy now or wait is going to depend on the individual buyer’s motivation and situation. Waiting may not be a viable option,” says Krista Forsberg, a real estate agent at Keller Williams in Edina, Minnesota. She also adds that even if a buyer can push pause on buying to later in the year or 2023, there isn;t likely to be significant improvements in prices or interest rates.
Experts say that buyers should be mindful of and keep an eye on the economy because it’s being pulled in all directions by inflation, soaring gas prices, the ongoing war in Ukraine and the pandemic, are a few reasons. In the US, it’s the housing economy that’s being affected by rising interest rates, making it harder to access affordable housing.
Steve Simmons, founder of October Real Estate in Los Angeles said that he believes that the stark rise in interest rates scare both the buyers and the sellers; they’ve no idea if the rates will stay or continue to increase. This lack of predictability causes many buyers and sellers to sit and wait while there are others who will scramble for a sale or purchase before things get worse.
That being said, MBA economists don’t see home prices falling in the near future. They report a median sales price of an existing home to be $361,400 in the first quarter going up to $402,000 in the second quarter, and slightly leveling off at $379,000 in the third.
Because of this inflation, high mortgage rates and record-high home prices are making it harder and harder for buyers to afford their mortgage payments. Today, according to Zillow, a typical monthly mortgage payment is 75% higher than it was in June 2019. The frustrating part is that earnings are not keeping up with the inflated costs. Wages grew 6.7% in June, but then fell behind the 9.1% increase in inflation.
So, the question, when will housing prices start to decrease? We’re not so sure. Since we’re not seeing any decrease in housing costs for new buyers any time soon, our tip for buying a house in a hot housing market is to start off with a budget and stick with it. But even with a slight increase in the number of homes for sale, buyers would still be facing steep prices and mortgage rates in the 6% range.
There are a lot of factors to consider when buying right now, and a lot of people are scared to make a mistake. Our advice is to go with what your gut says. If the timing feels wrong, then you will always find the wrong home, so wait, But if you feel that this is the right time for that, then you should go ahead with your homeownership plans.