When will property prices return to normal? | Company


For those who have been sitting on the sidelines watching what’s happening in the market, do you think to yourself “gosh, I should have bought a house last year or a few years ago!” Remember, hindsight is 20-20 and you can’t regress, you can only go forward. So when will house prices return to “normal”? We need to be clear on what the new normal is and what it looks like for buying a home. Here are things you should consider regarding when house prices will return to normal.

Employment is one of the fundamental drivers of the housing market. People feel optimistic when they have home security and part of that home security is having an income. Great workmanship and a stable foundation are two things that most families buying a home need. In other words, you don’t buy a house if you feel shaky about your job or your income, do you? After all, buying a home is a very permanent thing. This goes hand in hand with unemployment. The more people working, the more job growth there is. The more jobs created, the more house prices will continue to rise over time, which statistically supports an annual rate of appreciation of around 1%. It doesn’t always work that way, but that’s usually the consensus. If you look at the last 12 months going back to 2021-2020 with the pandemic, house prices have skyrocketed because more people can work from home and new job opportunities have been created. While families have had challenges associated with COVID, others have experienced exuberant growth that has supported strong housing over the past two years.

We are now in 2022 and real estate prices are still feeling the effects of the pandemic. For house prices to fall, two things have to happen. Number one is more supply. To increase the supply of houses available on the market, there must be a driver or a catalyst. The only driver and catalyst for supply is unemployment. When the unemployment rate starts to rise and more people leave their jobs, the costs go up, which is happening right now because of inflation. This could signal more homes available for sale on the market, which increases supply, creating less demand for housing because there are fewer people working to afford it. If you multiply that a million times across the United States, the math still holds. The law of demand is the same in real estate as in economics. It is reasonable to think that housing could stabilize and not grow at the rate it has been doing for the past 24 months. But housing prices to come down must have supply. Without supply, a nationwide slowdown or reduction in house prices could occur, but it is extremely unlikely.

So what does this mean for homebuyers in the future when it comes to budgeting and spending? This comes down to the golden rule. Make sure you have the economic means through money, credit and income to support a housing payment. For families who have a solid job and/or a solid financial base, they feel good about their income and finances. These people will get away with it exponentially, as 80% of people who buy homes do, if they have a long-term buy-and-hold strategy in place.

The ability to buy a home after refinancing that home lowers the interest rate and/or gets rid of the PMI and withdraws money, pays off debt, or completes home improvement projects. The fundamental thing that is a huge driver of the desire to buy a home for families in America is that real estate is the second largest driver of wealth in America today and has been for 40 years. Owning a home and having a retirement account you contribute to will absolutely make you richer over time. If you’re considering buying a home and want to learn or understand the pros and cons of how a mortgage payment could fit into your cash flow goals, get started today with a no-cost loan quote. from today !

Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes, vacation homes and investment properties. Learn more at www.sonomacountymortgages.com.


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