Unless you’ve been living completely off the grid, you know that the economic headlines lately aren’t exactly sunshine and roses. The news of inflation and a cooldown in the overheated housing market are enough to make a potential first-time homebuyer try van life for a while. But is that really necessary? Do you really need to put your moving plans on hold? Before you ask yourself “Should I wait to buy a house?” and gas up that van (I mean, have you seen gas prices lately?), take a minute to weigh your options. Here’s a glimpse of what the experts are saying.
Is 2022 a good year to buy a house?
After two plus years of the pandemic and seemingly nonstop tumult, it may feel like there’s never been a worse time than 2022 to make a big purchase. Inflation’s on the rise, for starters. Interest rates are going up. And the median cost of a home ($447,000) was a shocking 37.8% higher in May 2022 than in May 2019, according to Realtor.com.
Why Prices Are So Elevated
There are two main reasons for today’s soaring home prices:
- Limited supply: This actually stems from the 2008 housing crisis, which sparked the Great Recession. Since that time, the number of homes built every year has been significantly lower than pre-crisis. And even 14 years later, the market hasn’t caught up. Less inventory = fewer houses for sale.
- COVID-19: Like pretty much everything in our lives, the pandemic has affected the housing market. Due to lockdowns and restrictions, people throughout the nation began weighing the benefits of moving. And because of remote work opportunities, many ultimately decided to make the move — leaving crowded cities, heading for the suburbs (or even further out), and moving closer to family or friends. More people = more competition for limited inventory.
These two factors combined have exacerbated the market and allowed sellers to jack up the prices of their now-precious commodity. The good news, though? It looks like the market may be cooling down slightly as we head further into the summer months.
Rent vs. Buy: That’s the Question
So, what does this mean for a potential home buyer right now? Here are a few factors to consider in the buy vs. rent dilemma:
- Is your rent less than a mortgage payment would be? Do some research in your local market and find out about lenders, rates, and terms. If it looks like your rent is more affordable, you might want to stay put until prices ease up a little more.
|Important Note: Oftentimes, a mortgage rate will be less than a rent payment, but rent usually includes maintenance, taxes, and added benefits like internet and cable. Make sure you account for all the expenses you would be responsible for if you bought a home.|
- Do you have a down payment? Most lenders require at least 3% down. If that’s a burden, maybe you should wait.
- Are you in good financial shape overall? If this is the case, buying might be a good option, no matter what the market looks like. Putting your money into the equity of a home is a good investment any day — but it’s a marathon, not a sprint.
Will the housing bubble burst in 2022?
Technically there isn’t an officially defined housing bubble, according to economic experts. Homes aren’t overvalued in the same way they were in 2007; prices are up because of supply issues, and not much else. The risky lending practices that led to the pre-Great Recession collapse are no longer allowed — new regulations were put in place to stop that very thing — and, on average, people are not overextended with their loans.
So while the market is definitely cooling off, we’re unlikely to see a crash of the 2007 magnitude. Still asking “Should I buy a house now?” or “Should I sell my house now?,” though? The answer might be to sit tight a little longer. For the former, rents will ease up as housing prices calm down, so pocketing that extra cash and putting it toward a future down payment could be a smart move. And for the latter, reinvesting in a new home will probably be easier in a few months, too.
Is buying a house now a good idea?
Here are a few questions you should ask yourself, no matter what the market looks like:
- Are you in love with the house? This is important! As we’ve already mentioned, making such a consequential decision should not be taken lightly. Make sure you’re 100% confident that this is a place you will be content to live in and the neighborhood is comfortable for you. Of course, you may have a dream home in mind for further up the road. But for now, make a list of the pros and cons of moving into this particular home — always a helpful, if old school, way to help with big decisions. Examine your actual feelings about the house and whether it’s “the one.”
- Can you afford it? Seems so simple, but how many times have you negotiated with yourself in your mind when there’s something you want but can’t quite afford? That nice new car … that required some belt-tightening in the dinners-out department. Or that two-week vacation … that meant fewer new dresses for fall. With a house, the rationalizations have bigger consequences. So make sure you take into account not just your mortgage payment but property taxes, homeowners insurance, routine maintenance, and more.
- Have you spoken with a professional? It’s always essential to consult with a real estate professional or financial advisor before making a move. Experts can share their opinions based on historical trends and their own knowledge of how markets operate. But to make such a monumental decision for you and your family, you need someone who can take a deep dive into your specific circumstances and give you the right advice.
After evaluating your heart, your bank account, and the market in your particular area, if your answer to “When should I buy a house?” is “Now! This is the time!” — well, this is the time to prepare. Have a PODS portable storage container delivered right to your driveway, where you can load it up until you’re ready to move into your new home. PODS can store it in our secure storage facility, or you can keep it in your driveway. Once you’re ready to make your move, PODS will deliver it straight to your new address.
So you know you want to buy a house. But do you know where? Check out the PODS Blog for some great insights into the best cities for working from home, best states for retired folks, and, believe it or not, states that will pay you to move there.
Shannon Jacobs is a Tampa-based freelance writer and frequent contributor to the PODS Blog. She has lived in Atlanta, the Berkshires, and Nashville, but always returns to the warmth of Florida’s Gulf Coast.