Is It the ‘Single Worst Time To Buy Real Estate in History’? Depends on Who You Ask

There’s a reason why the phrase “timing is everything” doesn’t make us cringe quite as hard as other real estate cliches. (We’re looking at you, “location, location, location.”) Here’s why: It’s accurate. Homebuyers are always trying to time the real estate market so they can make the best possible deal—and it’s often difficult to do.

Time is the common thread between questions about mortgage rates (Should I lock in my mortgage rate now before they rise in a month’s time?), housing inventory (Should I put off buying until next month to see if there are more houses for sale?), and even relocating (Should we buy now so we can move before the new school year starts?).

At the current moment, homebuyers face a perplexing mix of realities: mortgage rates are still up and inflation is still putting pressure on everyone’s bottom line, but the median listing price actually fell (yes, fell) to $435,000 in August, down from an all-time high of $450,000 in June. So with all these question marks in the air, it’s hard not to wonder if it would be downright foolish to buy a house right now, or if the timing is actually good.

This week we clocked a particularly interesting discussion floating around on the r/RealEstate subreddit after one user posted the following question point-blank: “I was just told it’s the single worst time to buy real estate in U.S. history. How far off are they?”Reddit users chimed in with a variety of entertaining hot takes and personal anecdotes on the matter.

What experts think about buying a house right now

We’ve heard what the people have to say, now let’s bring a little data into the mix.“It’s true that home prices are high in 2022, so that perspective suggests that now might not be a great time to buy,” says Realtor.com Chief Economist Danielle Hale. “On top of that, the cost to borrow money right now—the interest rate you’ll pay on a mortgage—is also not far off of its highest level in more than 13 years.

This means that borrowing to buy a home is more expensive than it has been.”But Hale says these shouldn’t be buyers’ only considerations. With rents at an all-time high and still rising, buying a home and being your own landlord has advantages.

“You may think of owning a house as not having to pay rent, but economists view this as paying rent to yourself,” says Hale. “Taking on a mortgage with a fixed rate of interest (at least for a period of time) means that the homeowner has locked in the lion’s share of their housing costs—a nice hedge against inflation that is still running at just under 9%.”

She says that even if you don’t see any future home price appreciation, it can make more sense to buy than rent, especially in markets where the monthly cost of owning a home is lower than the monthly cost of rent.

“There aren’t as many of those markets, but there are still some, predominantly in the South and Midwest, as we found in our recent rental report,” Hale says.

Is it a good or bad time to buy a house?

With that information in mind, let’s go back to our initial question: Is now the worst time in history to buy a house?

“The data points to the ‘worst’ being behind us,” says Hale. “The number of homes for sale is up more than 26% compared to one year ago, which means that today’s shoppers have more homes to choose from than last year’s shoppers. Perhaps more importantly, the share of sellers making a price cut has risen, suggesting that today’s shoppers may have more negotiating room than before.”

Hale does acknowledge that homes are still more expensive than last year, but the price growth rate is slowing and is likely to slow further. Another positive indicator for buyers? Homes are lingering on the market longer.

“Time on market is beginning to increase, signaling that the days of having to make an offer as soon as possible—perhaps even before seeing the home—are behind us,” Hale says.Ultimately, buying a home is a wholly personal decision and the right timing varies from buyer to buyer.

“While market conditions couldn’t be called the best for buyers, they are somewhat improved,” says Hale. “Each of these indicators points to better balance than the housing market has seen over the last year, an advantage for today’s shoppers.”

By Natalie Way

Natalie Way is the senior editor at Realtor.com who covers news and advice stories about real estate, design, and celebrity homes. Natalie produces and co-hosts the “House Party” podcast. She can be reached at natalie.way@move.com.

Source: Is It the ‘Single Worst Time To Buy Real Estate in History’? Depends on Who You Ask

Critics By Michael Yardney

Property investment is a process, not just an event. So rather than just talking about going out and buying a property in 2022, the right time for you to consider investing is when you have all your ducks in a row.

This means you have:

a strategic property plan, so you know where you’re heading and what you need to do to achieve your financial goals,
set up the right ownership structures to protect your assets and legally minimise your tax,
a robust finance strategy with a rainy day buffer in place to buy you time

Of course, for some 2022 will be a great year to invest, but in a moment I’ll explain why that will not be the case for others. Sure interest rates are rising, but there is more to property price growth than that. It’s likely that you’ve heard me talk about the drivers of property price growth over the years.

There are so many things that determine a property’s price performance and growth trajectory, many of which are well outside of your control, and some of which also have nothing to do with the property itself. These include, but are not limited to:

The economy – the performance and state of the broader economy impact people’s ability to buy and sell property as well as …
Consumer Confidence – when people feel comfortable about their financial situation and their future job prospects they are more likely to make big purchases like moving home or buying an investment property.
Employment levels – if the community at large is experiencing high levels of unemployment, then fewer people can afford to pay a mortgage, which reduces demand for property
Government policy – aspects to do with tax, depreciation, and homeownership grants will work to boost or reduce demand for property, particularly new property in recent years, which is where the federal government’s primary agenda has been.
Population growth – or household formation to be more exact, as when more people move into an area this equals more demand for housing, whether it’s to buy or rent.
Local Demographics – things like average incomes, average age, household structure, crime rates, and employment opportunities.
Supply – The basic economic principle of supply and demand is a fundamental property market driver of price growth.
Availability of credit – property investment is a game of finance with some houses thrown in the middle, but even owner-occupier demand is very much driven by the availability of finance and the cost of money, in other words, interest rates.

Now, as a result of these factors – which are by no means an exhaustive list, but they give you a general indication of some of the major influences on property prices – our property markets move through cycles, from booms to busts and back again.

Last year rising property values around Australia were driven by a combination of pent-up demand and historically low-interest rates leading to FOMO (fear of missing out), which led many home buyers and investors to make take shortcuts just to get in the market.

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