If you were thinking of buying a home last year and then decided to wait, you’re probably not too happy with your decision. Housing prices are certainly on the high side right now due to a low supply of homes for sale. This lack in supply is leading to those homes that are on the market selling for higher prices (some nearly double what they were listed for last year), or potentially a bidding war between buyers.
So, should you buy now and potentially spend a bit more money than you hoped to? Or, should you wait to see if this alleged housing bubble will burst?
Let’s Define “Housing Bubble” Real Quick
Housing bubble this, housing bubble that. It’s a term that lots of us seem to throw around when we’re seeing a rise in prices, but in actuality, housing bubbles are super rare. The reason we’re all somewhat familiar with the term is that most of us have lived through the 2007 housing crisis (the aftermath of the housing bubble bursting). But, the reason that the housing crisis happened wasn’t simply because of inflation, or high demand and low supply, it was because homes were sold to people who didn’t really have the money to buy those homes. They didn’t have equity, they just had a mortgage which ended up being worth more than their actual homes once the market dipped. Lending standards have been raised considerably since 2007, and lots of regulations have been put into place to stop history from repeating itself. We’re not seeing a housing bubble, it’s just basic supply and demand.
If There’s No Bubble, There Will Be No Burst—Here’s What Will Actually Happen
If there’s no housing bubble, there’s not going to be a burst. While this may not be great news in terms of you getting a good price on your new home, it’s good news because it means that your home will likely increase in value once you purchase it. We don’t see housing prices decreasing dramatically anytime soon. However, prices will likely rise more slowly (at a much less extreme rate that outpaces inflation) now that it seems we’re heading back into a new normal post-pandemic. Part of this is because construction efforts have been renewed (they stopped during the pandemic). If you’re a buyer, you’ll likely have more selection and less of a rushed frenzy to put down an offer ASAP in your buying process, according to Daryl Fairweather, Redfin’s chief economist. In terms of numbers, Zillow’s forecast predicted an 11% growth in home value in 2022, vs. a projection of 19.% in 2021. However, Zillow amended its prediction to 16% for 2022. Translation: this year will be less intense than last year, but it’s still going to be a seller’s market.
So, When Should I Buy a House?
Based on predictions, you’re not going to benefit by a ton if you wait it out and play the long game, especially if you’re ready to buy now. Of course, if you’re on the fence, it wouldn’t hurt to wait until the second half of this year to see how things have shifted. Prices may stay largely the same, but you may at least have more options.