If you’ve been trying to buy a house, you’re familiar with the alarming state of the current real estate market. The prices for houses started surging in 2020, and it’s unclear if they’re ever going to stop. In June this year, the average price for a regular small house with four bedrooms was $450,000. That’s a 31% increase in price in just two years. As a potential home buyer, we don’t blame you if you’re sweating.
With such intense financial pressure on prospective buyers, this inevitably means that many buyers will quit the market. Along with other economic factors, many are left wondering if this housing bubble will ever burst.
The U.S. GDP has been declining for the past six months, and it’s a clear symptom of serious economic troubles. However, because consumer spending and the job market are in good shape, economists have not announced an economic recession. But some MBA specialists still predict a recession will come.
The Real Estate Market in August 2022
Within the last several years, the housing sphere has been one of the most successful in the U.S. economy. Just ask some top realtors in California to show you the stories about their financial success.
From a buyer’s perspective, however, finding an affordable living space has become a bit of a fantasy. Surging interest rates are scaring all the market participants, and it’s hard to say when and if these rates will decline.
Because the circumstances are hard to predict, buyers might consider waiting to invest. However, this risks the situation getting even worse. But home sales do seem to be decreasing. In June, there were 5.4% fewer home sales than in May. That’s five months in a row with declining home sales.
Even with home sales declining, the prices haven’t budged. Quite the opposite, the average price for one-family homes set records in June. At $416,000, that was 13.4% higher than last year. This tendency is rather alarming, as it means that it’s not likely that the prices for real estate will start dropping shortly.
Will the Prices Keep Rising?
People’s wages are not keeping up with the rate of inflation. In June, inflation reached a high of 9.1%, another sign of the unfavorable situation with the U.S. economy. Restricting people’s incomes, inevitably contributes to the critical situation in the real estate market, as fewer people can afford to buy new homes for their families. Still, it’s possible to successfully sell your home anytime with true professionals such as top real estate agents. It’s not clear if the economic situation will affect housing prices. But a current prognosis estimates that after an increase in prices this spring, the average property value will drop to $379,000 within the October-December quarter.
The Situation with Housing Inventory for 2022
Another factor that impacts the real estate market is the housing inventory. One of the reasons house prices have increased so dramatically is because new houses aren’t being built at the same rate they are being bought. That has caused an inventory shortage. However, with supply chains opening back up, real estate experts predict the inventory to grow in the next year.
Is It Reasonable to Purchase a Home Now or It’s Better to Wait?
Despite the growing housing inventory, the unpredictable economy makes it hard to know if housing prices will increase or decrease. Many prospective home buyers wonder if they should pounce on an opportunity now or wait until prices go down. With the future of the market being uncertain, it’s not reasonable to wait. In these conditions, it’s much more advisable to buy a home if it matches your needs, desires, and finances.
If you discover a house that looks lovely, is situated in the area you like and is within your budget, take the opportunity to buy it. Houses are being scooped up left and right, so take advantage of the chance you have.
The Tips for Purchasing a New Home
Buying a new home is one of life’s biggest decisions. You can do your research, and consult financial advisors and real estate agents, but the decision comes down to your “gut feeling.” You’ll know when the right house crosses your path because it will feel like home.
You want to feel satisfied with your house because you can’t just return it back to its previous owner. Selling a house is always expensive, as the seller’s costs can be up to 10% of the price the house is supposed to be sold. So, if you immediately try to sell it, you risk losing quite a lot of money.
Wait until you have a good financial situation to buy a home. If you already have debts from credit cards or student loans, these can impact your chances of getting a good mortgage rate.
Tips for Selling a House
To sell your house, you first need to find a good real estate agent. A good agent will know the specifics of your local housing market and be highly reputable. With their advice, set a fair price for your house, and then launch your marketing plan. Additionally, renovations and attractive staging will improve the look of your home to attract more buyers. In general, you want to make your home feel spacious and light, so potential buyers can imagine themselves living there.