It’s no secret that houses are more expensive today than usual. But the level of price increases can be shocking.
According to the S&P CoreLogic Case-Shiller National Home Price Index, house prices in June rose 18.6% over June of the previous year. This is an increase from a 16.8% increase in May over the same period last year.
This 18.6% increase is also the largest annual increase in the history of the index, which dates back to 1987. And now home prices are 41% higher than they were at their last peak during the 2006 housing boom.
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Why are house prices so high?
The basic laws of supply and demand state that when a product is not widely available, demand for it will rise and prices will follow suit. This is what is happening in the residential real estate market today.
While the supply of affordable homes has increased slightly in recent months, it still declined 12% year-on-year in July, according to the National Association of Realtors. Because the housing stock is so limited, buyers are forced to compete for the same properties. This is caused by bidding war emerge across the country, driving up housing prices.
Should you be trying to buy a home today?
Today’s Housing market it’s hard to crack, to put it mildly. If you buy a home today, you may end up paying a huge premium on it, leaving you with a larger down payment and a larger down payment. mortgage to pay off. Plus, because the supply of affordable real estate is so limited, you might have to compromise on some of the things you want in your home, whether it’s a finished basement, a refurbished kitchen, or a large backyard.
For these reasons, you may want to pause your search for a home for a short while, especially if you’ve been doing these months and haven’t yet found a home that works within your budget. The advantage of buying a home today is that mortgage rates are near historic lows, so you have the opportunity to get an affordable home loan. But mortgage rates are likely to remain low not only until the end of the year, but also in 2022 and possibly beyond, so waiting for a purchase might not hurt you in this regard.
Now we do not know when more houses will appear on the housing market. But if you pause your search for a while and take a short break, maybe just four or six months, you may find your inventory richer when you’re ready to start searching again. And as soon as there are more stocks, house prices should start to decline.
Of course, if you have a healthy budget for buying a home and don’t mind a lot of competition, then you can always move forward with your plans to buy your own home today. But if you’re struggling to navigate the housing market or are afraid to start home searchthen waiting for a purchase might be the right decision given how much house prices have risen.