The No. 1 law of economics is supply and demand, and this truly applies in housing. Like we have seen, more demand and less supply causes prices to go higher. But, is there a change or something going on that could spoil that dynamic? Is there a lot of inventory coming on the market?
Mortgage experts do not believe the market is in a bubble, like that of the 2008 housing crash. In today’s market, lending standards are tighter, due to lessons learned and new regulations enacted years ago, after the crisis. That means those approved for a mortgage now are less likely to default than those who were approved in the pre-crisis lending period.
The nation still is suffering from a housing shortage that has reached crisis proportions at a time when many millennials are reaching the age of considering homeownership. This is likely to keep prices high. Mortgage experts have no reason to believe that home prices will stop appreciating, which is why, even in the current market, it is still a good time to buy a home.
Even so, homebuyers are faced with tough choices in today’s market. Predictions indicate that home prices will continue to rise, and new home construction will continue to lag behind, putting buyers in tight housing situations for the foreseeable future. For some buyers, this means moving into more affordable metro areas, while others will need to stretch their budget or compromise on size or other amenities.
Snagging a house now, even if it means sacrificing other purchases, could mean saving money down the road, if home prices and equity continue to rise. There is a chance you also could save by getting a house and locking in a rate before both home prices and interest rates increase.
Another important consideration in this market is how long you plan on staying in the home. If you are buying your forever home, you have the luxury of riding the waves of an up and down market. Those who plan on moving in a few years are in a riskier position if the market plummets.
This is why it is so important to shop at the outset for a real estate agent and lender who are experienced housing experts in your local market, and are trusted by you to give sound advice.
– Matt Quagliana, NMLS #1937747, is a licensed mortgage professional with Homeowners Financial Group in Canton. He can be reached at firstname.lastname@example.org or 770-885-6060.