What 5 experts say about the modern housing market

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What happens when you combine a record low mortgage rates, low housing stock, lightning sales, and skyrocketing prices?

These are tough times if you are looking to buy a home on the market.

For potential home buyers, these factors make it a seller’s market for centuries.

Simply put, there are not enough homes to meet current demand. “The aggregate level of inventories has recently dropped to extremely low levels, and since 2014, inventories have been falling,” says Logan Mokhtasami, Lead Analyst Wire body, a mortgage news and analysis agency. Strong demand is fueling bidding wars, which further increases home prices and puts home buyers at a disadvantage.

How long will this last and when will the situation return in the buyer’s favor? We asked five economists and mortgage experts when they think this unprecedented market will finally start to cool down and what you should do now if you want to buy.

What experts think: how long will this hot housing market last?

Research Director
John Burns Real Estate Consulting, an American real estate research company.

Rick Palacios, Research Director

Palacios sees signs that things may normalize and flatten out a bit. “We hear from home builders all over the country,“ I used to be able to sell these things like hotcakes, but now I can still sell them, but it might take me a little longer, ”he says. With the spike in property values, a number of potential home buyers have dropped out of the market as they can no longer afford to buy a home comfortably.

Looking into the future, we can see continued price increases, but at a much slower pace. “Our National Existing Home Price Predictions For This Year [is an increase of] fourteen%. We think that this figure will be halved and will grow by 7% by 2022, ”says Palacios. Thus, it looks like the domestic market will continue to favor sellers, but may not be as extreme as we have seen.

Deputy Chief Economist CoreLogic, a California-based data analytics company

Selma Hepp, Deputy Chief Economist

There are signs that the hottest days of the market are behind us, Hepp speaks. According to her forecasts, this may be a bottom and we may start to see a gradual increase in stocks. While stocks are still extremely low, there have been some minor weekly improvements.

This is still far from a buyer’s market, but Hepp believes there are signs of stabilization, such as homes receiving fewer bids. So, instead of betting against 20 other people, you can only compete with 10-15 other buyers.

Lead Analyst at HousingWire, a mortgage analyst firm

Logan Mokhtashami, Lead Analyst

“We can see that rising prices will affect demand as some buyers have left the market,” he says. Mokhtashi… As a result, people will get tired of buyers and the supply will increase.

No matter how active the housing market was, in many respects this was to be expected, – continues Mokhtashami. Barring the rise in home prices, which has lowered affordability and is exceptionally high, he said, the US home sales data looks perfectly normal. Mokhtasami believes that the deferred demand due to the restrictions is affecting the market, which means that some of the frenzied real estate sales may be related to the flow of home buyers returning after the restrictions are lifted and the economy resumes.

Senior Economist, Center for Economic and Policy Research, Washington DC

Dean Baker, Senior Economist

Today’s low interest rates played a role in increasing the purchasing power of buyers and increasing home sales prices. So if mortgage rates an inch higher, which could help cool the market. “In the last decade, house prices have become more sensitive to interest rates,” Baker speaks. If the mortgage and refinancing rates eventually begin to grow gradually as some experts predicted, which could cool the market down a bit.

Product Director at ATTOM Data Solutions, a California-based real estate analytics and information company

Todd Theta: Product Director

Theta does not anticipate a sharp drop in prices. Instead, Theta believes there are signs that the market may gradually return to something closer to normal. “I do not see any macroeconomic problems that can cause a sudden market correction, whether on an international scale, [or] in the US, ”says Theta. For example, the housing stock has grown slightly in recent weeks. “So we expect this to continue and facilitate [inventory] a little, ”says Theta.

Another factor that Teta believes will help cool the market slowly is the rise in interest rates. “We expect rates to continue to rise until the end of this year,” he says. “Basically, this should gradually reduce demand.” For house prices to plummet, rates must skyrocket and kill demand. Or it will take a large number of houses to flood the market. Aside from the unexpected, these are unlikely scenarios.

What to do if you buy from a seller’s market

Today’s low interest rates have increased the borrowing capacity of the buyer, but the rise in house prices threatens to nullify it. Here are some strategies for a home buyer trying to buy in today’s market:

Postpone buying a home

If you can postpone buying a home, it may be easier for you to become a home buyer next year. “I don’t usually say to try to calculate the market, but… if you can delay until early next year, the stock situation should be better,” says Theta.

But any changes in the real estate market are far from guaranteed. “It’s a big if,” he says. “There are many variables that can keep us where we are early next year.”

Focus on your budget

If now is the right time in your life to buy a home, then you should only focus on your personal financial circumstances and not what is happening in the broader market. Understand how much house can you affordand stick to your budget.

If you buy a house now with fixed rate loan, what you pay each month will not change if house prices fall. As long as you have funds set aside for advance payment, created emergency fundand can still afford to save and invest retirement, experts say it’s best not to worry about the time to market.

Use this waiting period to create a more compelling case for home buying.

If you decide to postpone buying a home, you can still work towards becoming a homeowner in the future without actively shopping for the home. Savings for a larger down payment and a higher credit rating will help you get the lowest interest rate regardless of market conditions. We put more advance payment to the house and taking steps to improve your credit score can improve your financial situation in the future, despite the potential rates are rising

Beware of panic shopping

Don’t buy a home that you can get right now because you are worried that prices will keep going up forever. You should not put your financial future at risk by purchasing real estate at the upper limit of what You can affordespecially if it affects your savings and retirement or requires you to take on new high-interest debt through credit cards or personal loans.

The essence

While the experts we interviewed do not expect a sudden drop in prices, we currently expect prices to rise at a slower pace in the future than they have recently.

If the past year taught us anything, it is that you need to be prepared for the unexpected. Whether you decide to buy a home now or in a few years time, it should make sense to you.

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