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If you need a house, and you can reasonably afford one that you like at today's prices, and you can cope with potentially being "stuck" in it for several years,

If you need a house, and you can reasonably afford one that you like at today's prices, and you can cope with potentially being "stuck" in it for several years, then buy a house. It's impossible to know what will happen. Even after 2008, when it was obvious that the market had to fall because there were >1 million underwater homes that banks were sitting on with the fed letting them pretend they were still worth the old price, it was still impossible to know exactly where prices would end up or how long it would take. Personally, I tend to think that prices will drift downward slightly, moreso in places that are seeing big outmigration, but it's hard to say. If we keep seeing 10% inflation, then prices staying flat is actually the same thing as housing getting cheaper. Make good decisions based on the information you can have. You will always know more tomorrow.

toomuchtodo 4y ago
This ^ with the caveat that we’re already seeing prices soften in some markets and sellers making price cuts. The peak was likely within the last 45-60 days. Also consider inflation continues to run hot (~8%), which will force the Fed to raise rates faster (50bps->75bps), and per the Taylor rule, I would expect to see mortgage rates between 8-10% within the next year (depressing asset prices; people buy a payment). If the Fed has to pull a Volcker (~10-20%) to quell inflation, RE prices are in for some pain. https://fortune.com/2022/05/27/housing-market-correction-peak-mark-zandi-moodys-home-prices-outlook/ https://fortune.com/2022/05/27/housing-market-correction-pea... "The housing market has peaked…everything points to a rolling over of the housing market," Zandi says. "In terms of home sales, they're falling sharply. Housing demand is coming down fast. Home price growth [will] go flat here pretty quickly; we will see [home] price declines in a significant number of markets." —- Moody's Analytics chief economist Mark Zandi https://www.forbes.com/sites/jonathanponciano/2022/05/24/housing-market-boom-is-over-as-new-home-sales-implodeheres-what-to-expect-from-prices-this-year/ https://www.forbes.com/sites/jonathanponciano/2022/05/24/hou... "In short, the party is over," Pantheon Macro chief economist Ian Shepherdson said in emailed comments after the report, pointing out the collapse in sales follows a "steep downward trend in mortgage applications" as mortgage rates start to rise on the heels of the Federal Reserve interest rate hikes that started in March. https://en.wikipedia.org/wiki/Taylor_rule https://en.wikipedia.org/wiki/Taylor_rule https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html https://www.cmegroup.com/trading/interest-rates/countdown-to...

toomuchtodo 4y ago

This ^ with the caveat that we’re already seeing prices soften in some markets and sellers making price cuts. The peak was likely within the last 45-60 days. Also consider inflation continues to run hot (~8%), which will force the Fed to raise rates faster (50bps->75bps), and per the Taylor rule, I would expect to see mortgage rates between 8-10% within the next year (depressing asset prices; people buy a payment). If the Fed has to pull a Volcker (~10-20%) to quell inflation, RE prices are in for some pain. https://fortune.com/2022/05/27/housing-market-correction-peak-mark-zandi-moodys-home-prices-outlook/ https://fortune.com/2022/05/27/housing-market-correction-pea... "The housing market has peaked…everything points to a rolling over of the housing market," Zandi says. "In terms of home sales, they're falling sharply. Housing demand is coming down fast. Home price growth [will] go flat here pretty quickly; we will see [home] price declines in a significant number of markets." —- Moody's Analytics chief economist Mark Zandi https://www.forbes.com/sites/jonathanponciano/2022/05/24/housing-market-boom-is-over-as-new-home-sales-implodeheres-what-to-expect-from-prices-this-year/ https://www.forbes.com/sites/jonathanponciano/2022/05/24/hou... "In short, the party is over," Pantheon Macro chief economist Ian Shepherdson said in emailed comments after the report, pointing out the collapse in sales follows a "steep downward trend in mortgage applications" as mortgage rates start to rise on the heels of the Federal Reserve interest rate hikes that started in March. https://en.wikipedia.org/wiki/Taylor_rule https://en.wikipedia.org/wiki/Taylor_rule https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html https://www.cmegroup.com/trading/interest-rates/countdown-to...