They are struggling with the home prices, intense competition and low inventory so many buyers are wondering
“When will the market crash?” Well that answer is coming up, right now.
What goes up must come down is not a phrase you can apply to every scenario and the experts say that there’s no reason to prepare for a crash landing like we experienced in 2008 and 2009. The reasons for the high prices are very different: there are more buyers than there are properties for sale.
Although home prices have shot up 17.2% nationally, these prices are unsustainable.
Rather than crashing, what’s more likely to happen is that, over the next year or two, prices will continue to rise, but at a much slower pace. Bidding wars will taper off, and the astronomical offers over asking price will eventually come down.
But that doesn’t mean prices will return to their pre-pandemic levels. List prices are expected to continue rising to meet sale prices, but the annual increases won’t be nearly as brutal.
The only way prices would drop by any significant amount would be if mortgage rates shot up substantially and a lot of homes flooded the market. Record-low rates have allowed buyers to purchase more expensive homes while keeping their monthly payments within their budgets. As rates rise, buyers won’t be able to afford the higher prices. Plus, an increase in inventory would give buyers more choices, meaning there would be less frenzied competition.
Some good news about The economy is that it’s improving. Forbearance programs have kept a flood of homes from going into foreclosure. The high home prices should give even strapped owners a cushion, allowing them to sell their homes and potentially even walk away with a profit. That’s a departure from the late 2000s, when many folks owed far more than their homes were worth on the market.
The loss of a home would create some personal hardship, But owners will probably be able to walk away and be in OK financial shape.
Buying a house is often the biggest investment that most folks will ever make—so they want to make sure it will increase in value. But many folks are wondering if the value of homes purchased
today at record-high prices will fall once the COVID-19 pandemic is over and the market returns to some semblance of sanity.
Will they be able to sell them for at least as much as they paid? Or will they wind up owing more on their loans than their homes are worth?
The experts say most buyers shouldn’t worry. The lack of supply combined with the high demand should keep home prices stable —for the most part.
It’s certainly possible that home prices can decline. But the experts believe that there won’t be big declines and that prices will flatten where they are.
Good news, finally!