| Hi Taylor:
I've been holding off on buying a house because the prices have been
so steep, but I'm reading stuff about a market correction. Any idea
if my time has come? - Erica
Hi Erica: I think you might become a homebuyer in the near future!
Can't say exactly when or what you'll pay, but we've got some clear
signs that things are slowing down.
effect of interest rates. By design, the fed raised interest
rates in hopes of stopping inflation. The housing market has been
a key factor in our red-hot economy, and when mortgage rates are
higher, people are less eager to buy. It's a double-edged swordyou
have to pay more in interest but you hopefully won't have to pay
$100,000 above asking for the house you want. The rate hikes may
cool the market but we're still waiting to see those effects.
However, some analysts think we've entered a full-blown correction.
factors. The price of houses has been going up steadily for
nearly a decade, minus the tiniest blip at the beginning of the
pandemic. Prices had to slow down at some point, and everything
about the global economy is factoring into the current downturn.
In addition to everyday people paying more at the pump and in
grocery stores, contractors and developers are paying top dollar
for timber and other building materials. I've talked to guys at
construction companies who are ordering windows, siding, and roofing
the day a project breaks ground, knowing it might take six months
for the supplies to arrive. Squeezing the economy never feels
good and certainly doesn't look good on paper, but there will
be a silver lining to slowed construction as our supply chains
3. Value. About 15 years ago, the housing market collapsed
because a lot of people bought more house than they could afford.
We're not heading into that kind of crisis this go around. Instead,
it looks like the housing shortage led to a lot of properties
being overvalued at the point of sale. If you bought your forever
home and spent too much, you might feel annoyed. If you bought
a million-dollar property in April that you're hoping to flip,
trends don't look to be your favor. The big question will be how
housing prices keep paceor don'twith inflation.
| We've entered
a new phase of the American housing market. We don't know how long
it will last or what the next phase will be, but you can bet that
things are currently shifting away from sellers and toward buyers.
Hope it all works out for you!
© Taylor Kovar
June 15, 2022
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before implementing any strategy discussed herein. To submit a question
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