There's never been a worse time to borrow. It is a fantastic time to buy if you have the cash.
(Not to mention the not fully internalized effects of interest rates on other buyers' and sellers' behaviors-- prices have not nearly moved as much as one would predict from interest rate changes).
At least in our area, if I had the cash then I'd let houses sit for six more months, let reality hit a few folks in the face, wait for those prices to drop.
Yes, but you're still getting a discount on an inflated price. You'll get that same discount six months from now, only on a much lower price when 8% interest rates start to really cut down on the buyer pool.
From my POV, what you suggest is going to buy a car 12 months ago, convincing the dealer to take off that "market adjustment surcharge, then bragging about how much of a deal you got by only paying MSRP. Versus the person 12 months later that started negotiations at MSRP, and not an artificial price.
(Disclaimer: I'm just a guy on the internet talking out his ass. The number of houses I've purchased can be counted on one hand.)
I have lost count of the number of people who were convinced that the housing bubble had peaked in 2018-2019, and were waiting for the crash despite having enough money to buy. None of them can afford to enter the market now.
I don't think house prices will drop until there's a pressure on home owners to sell.
The two biggest reasons I can think are:
- People with ARMs unable to make payments - People losing jobs
I remember well that, despite the many foreclosures in 2008, people that had no explicit reason to sell would hold on their homes for years until they were above water again. I distinctly remember houses going on sale, then going off market, over and over again until the owners could walk away at least without a loss.
As long as unemployment is low and not too many people got an ARM, I don't forsee this market undergoing a rapid correction.
The houses that sit are either: extremely expensive, or need updates. Anything of good value is gone in 1-2 days.
Redmond is out of my price range.
It's the kind of thing a real estate agent says. Not that I think the original poster is one. The truth is that owning real estate, like owning most things and investments in particular is very situational. People make the decision too much based on what people around them are doing. It's much better-- good market or bad-- to be thinking things like: is this a good price? how long will I want this property? how much financial risk am I taking. etc. If that is your framework you don't really need to worry about the "good time / bad time" news cycle.
Good time to buy a house is basically when you are ready to deal with it. Good time. Bad time. If you are ready, you are ready.
( Yes, I know it is much harder now, but that is a separate conversation. )
edit: I just had this weird flashback to pre-2008 where a guy was trying to sell me condo after I just came to US. He knew I could not possibly afford $160k for a condo, but it did not matter. There was just soo much money floating in real estate and so many people speculating, I probably could have had a condo now that I purchased with zero chance ( at the time ) to pay it off. Wild times.
We are obviously not revisiting that scenario now.
In which case this kind of article really isn't for you. You're looking for real estate investment news, not housing.
https://www.redfin.com/news/housing-market-update-home-selle...
Not quite yet. Lots of sad sellers holding out hope for a macro long gone. Supply is constrained, but mortgage rates + risk free rate means house prices will come back to mortgage payment/wage governed prices. Folks who can will stick it out, folks who can't (relo, death, divorce, etc) will set the comparables/comps in their market.
People are buying smaller houses because that's all they can afford. Prices are not coming down per square foot (yet): https://fred.stlouisfed.org/series/MEDLISPRIPERSQUFEEUS
Prices have stopped sky-rocketing upward. Considering housing is ~40% of the inflation bucket - this trend (if it continues) should slow down inflation soon.
Or a delta that's maybe 2x standard deviation.
Maybe? In the 1970s in the UK we had double-digit inflation. It turns out that was the best time to borrow because (wage) inflation eroded the cost of mortgages within just a few years, making a large mortgage in 1970, a very small one by 1980.
Whether inflation, right now, is coming back under control in Western economies is a matter of debate.
Right now, we have both - high prices and high rates.
In the ~2012-2018 era, we had low-medium rates and average prices
In the Covid 2020-early 2022 era we had super-low rates and high prices.
Because the asset prices have not adjusted to the new rates yet, now is a [temporary] worst time to buy, regardless of whether you are borrowing or not.
Right now new construction can run better deals by paying down mortgage rates. But new construction has downsides too as the location may be less desirable or the lot size smaller etc…
There's new construction in the area I'm looking at, but it's well out of my price range unfortunately. There are empty plots of land that cost more than my current house..
Or dollars are devalued since there's ~40% more M3 than pre-pandemic: https://fred.stlouisfed.org/series/MABMM301USM189S
Only time will tell which is the case