Housing Market Crisis – What Should You Do?

As the saying goes: History repeats itself. Following the great financial crisis of 2008, there has always been a lingering skepticism and vigilance with regard to the sustenance of US housing prices. Mere common sense and the evident records of history tell us that something may give eventually. 

One possibility is that the supply will catch up to the pace of demand as inventory opens up; more and more people sell their homes or properties, thus driving prices to a considerable low. In other probable cases, it may be possible that prices will eventually hit a certain tipping point, and home buyers adamant about saving money by opting for low rates will gradually lose interest as rocket-high prices consume any leftover selling. 

These are some possibilities, and there is no means to predict the certainty of the fate of the housing market and whether or not it will crash. If you want a glimpse to make a forecast, however, the key is to check whatever they’re putting up for sale. Nonetheless, determining whether the housing market will flatten remains a guessing game, with so many dynamic factors and stakes at play. 

The situation in the near future

Nothing is guaranteed in real estate, but it’s worth knowing that the Federal Reserve has plans to maintain the prime rate low even throughout 2022. The prime rate refers to the rate by which banks tend to loan money to each other. When this is low, it means that interest rates for consumers remain significantly low as well. This fact alone is sufficient enough to keep buyers enticed. Moreover, Fannie Mae’s Economic and Strategic Research Group Forecast states that there is also a predicted growth rate of 6.8% in 2021, which establishes a solid, robust market in the foreseeable future.

Apart from this, the aspect of inventory is also considered. Due to labor and material shortages, builders nowadays are nowhere near their building levels compared to the pre-pandemic situation. Little inventory means that there is a strong likelihood for homes to sell for prices that are higher than expected. 

Even so, the question is: until what extent do these prices continue? Or rather, where do they stop? Most real estate investors are uninterested in splurging cash for properties that they plan on making a profit from. Add to that the fact that only a considerable number of home buyers with a sufficient budget can pay how much the mortgage lender will lend and the asking price. Soon enough, upfront cash buyers are settled, and individuals searching for homes will require a stabilized housing market in order to be homeowners. 

In a nutshell, this simply means that there’s nothing immediate in the foreseeable future that signifies an upcoming housing market crisis or a drop in prices. In fact, the statistic predicts otherwise; Zillow Economic research forecasts a 10.5% value growth from its present levels.

What You Need to do 

Even though there’s no imminent danger of a market collapse on the same wavelength as the 2008 crisis, there’s nothing wrong with staying vigilant anyway. Most experts state that there is only a minimal chance that the United States is bound to experience such instances, and most of these things tie considerably to lending practices and legislative changes. 

Sometimes, ‘crashes’ happen due to the factors mentioned above. But these crashes usually represent a push back on home prices and a cooling of the market – a cycle that is deemed normal and bound to be expected. However, when such a situation happens, most real estate investors tend to snag the best deals, and first-time homebuyers have themselves an opportunity to finally become homeowners. 

Here are some things you can do in this situation.

1. Don’t get immersed in the frenzy of buying. 

Paying more than what a property is worth will have you buried in debt and expenses when the housing market finally rights itself. For this, it’s important to look through conveyancer quotes to secure the best deals for your prospective property to avoid future problems. 

2. Don’t purchase more than what you can afford. 

If you have to stay on budget and keep meticulous track of each dime going into your mortgage payment, you’re better off opting for property options that are more affordable and less expensive. Make sure to stick to what you can only pay for, especially since it will only result in more issues when you do so. 

3. Build a savings account for emergency purposes

Consider putting enough to cover at least six months of expenses to best prepare for emergencies. You may even opt for a bigger emergency fund, depending on your preference and comfort level. 

4. Try refinancing

If you own a home right now, decide if the time is appropriate for you to move. If it’s still possible for you to wait, then there’s no reason why you won’t take advantage of existing low rates by refinancing your mortgage. 

You may also want to be patient and strategic in such situations. Consider your options and widen your search when it comes to affordable housing.