Anyone buying a home today in many markets better have at least a 5 year horizon because it is not just a seller's market, it is a super seller's market. Homes are selling above list price in some areas as there are bidding wars going on. This all makes me very nervous because I have lived and worked through several real estate downturns when things changed and it was a buyer's market.
When that happens homes can go down in value 10 - 50%. I have seen it before. It can and does happen. Certainly, when interest rates go back up, the housing market will cool. The only reason it may take a while is that we are 4 million homes short to meet demand. However, when that happens and builders see the potential for profit, they will start building homes like crazy to meet demand. It could take 3 years or more to catch up; but often this leads to over building and that is when prices start to fall.
The reason to buy today is to lock in a very low fixed rate mortgage for 15 or 30 years. Even though the home prices could be very high, the payment could still be quite reasonable because rates are so low. But, this assumes staying in place to potentially ride out a down cycle when one comes.
People who do not plan to remain in the home for several years probably should not buy now. Of course, the best laid plans can change suddenly as a result of events beyond our control. But when we are at the top of the market, it is not wise to buy a home thinking that you will sell in a year or two. You would be buying at the top of the market, which is always risky in the short term. Buyer beware. Timing is everything in the real estate market.
At Paragon Home Resources, we work with people to sell and buy homes across the country. We can advise on the best price and terms and help our clients sort through what is best for them.
