The Cost of Waiting
Time to get out our crystal balls! When is the best time to buy a home? Will prices decline this summer? Are we moving toward a buyer's market? Get all your answers here.
*** VIDEO TRANSCRIPT ***
It's no secret that the real estate market is absolutely bonkers right now. I'm frequently asked if I think this is a bubble and if I think prices are going to decline significantly any time soon. I really don't think so and here's why.
We are in this predicament largely because there is a shortage of housing. And there is a shortage of housing because there are not enough houses being built. During the recession, builders stopped building. And tradespeople - the people who normally built houses - went and got other jobs. When demand for housing increased again, there was nobody to build the houses. And building hasn't caught up to demand. We have a nationwide housing shortage.
Also, one of the reasons that so many homes were foreclosed on during the last recession was because people were under water. They owed more than their houses were worth. Lenders had been giving mortgages to anybody with a pulse for a decade. No down payment or 80/20 loans were common. That's not the case now. Lending guidelines are much tighter. Down payments are commonplace. And homeowners have record amounts of equity in their homes.
Yes, unemployment is still high. But if a homeowner can't make their mortgage payment and they're sitting on $200,000 in equity, they're not going to let that house go into foreclosure. They're going to sell it. And they're going to walk away with $200K.
If I had a dime for every time a customer told me, "Oh, we're going to wait and see what happens. These prices can't last. We're going to wait for the next decline," I would have a pile of dimes so massive I would not be able to get out of my office.
To be clear, I wish prices would decline a little. I don't think that would be a bad thing. It would open up homeownership to a lot more people.
But if you are waiting for that to happen before wading into the real estate market, I would encourage you to rethink that strategy. More often than not, when I see people wait, what actually happens is they get priced out of the market.
They say that hindsight is 20/20. How many of you wish you'd bought a home in Port Townsend or Seattle or San Francisco a decade ago? Or two decades ago? Don't be sitting here three or four years from now wishing you'd bought in 2021.
