Should I Buy a Home in 2021/2022?

Do you have a HappyHouse?

I have heard from so many people lately who would like to take advantage of the skyrocketing home values and sell their homes. When I ask why they aren’t, the resounding answer is “Where will we go?” I get it, at first glance the real estate market can be a scary thing right now, but there are still several good reasons to take the leap.

Do we need to discuss mortgage rates again? Considering the majority of homebuyers in 2021 were Millennials, a large portion of people buying homes today might not realize that mortgage rates in the ’80s were between 9% and 19%! The rates we enjoy today have really never been seen before, so try to keep perspective when the rates are bouncing around between 2.5% and 3.75%, because the long-term average is 7.83%! Yes, we keep hearing that the rates are going to go up, and that is not a gimmick to get buyers and sellers, the rates are expected to go up. However, for the remainder of 2021, at the very least, the rates are worth deeper consideration. What I mean by a deeper consideration is do the math. Take a home you’re interested in and find out what it will cost you with today’s rate and at today’s price versus what it would have cost you at a price reflecting an average year’s appreciation with an average rate. Although the money may be going to different places, the seller instead of the lender, it may not be as expensive as you think. Mortgage experts cannot tell us when rates will go up, nor can they say how fast or how high they will go.

While the rising home values probably have a lot to do with your reluctance, this is also a reason to go for it. You can still get top dollar, or very close to it if you sell your house today. Although the market is starting to cool off a little, homes are still selling at an incredible price growth over last year. Therefore, selling your current home at such an increase should offset the higher price you may pay for your next home. While mortgage experts can’t predict what the rates will do, neither can real estate experts predict what will happen with home values in the next couple of years. As we have all heard countless times in 2020 and 2021, these are unprecedented times, which means no one has any relative data to give us even a guesstimate of what we have to look forward to. According to the National Association of Realtors, as of 2018, the median time homeowners kept their homes was 13 years. Therefore, even if home values dropped in the next few years, most people who buy now should come out ahead in the long run regardless. 

A lot of people want to refer to the housing market in 2007/2008 to try and foreshadow what could be coming, but today’s market really has nothing in common with it. In 2007/2008 there was plenty of available.

Inventory, the problem was irresponsible lending. Today, values are reflecting the lack of inventory coupled with low-interest rates and an epidemic chaser, not lending practices. When the housing market collapsed in 2008, it was flooded with foreclosures. We will surely see a rise in foreclosures at some point due to Covid-related job losses, but with the housing shortage, it might not have as big an effect as it would under normal circumstances. Normally an influx of foreclosures would create a flood in inventory and drawdown values, however, since we have an extreme shortage in inventory, what would normally cause a flood could just cause a rise to healthy levels. In turn, this should keep prices from drastically dropping. Another big difference between today’s market and 2008’s is that the majority of homeowners, even those who took advantage of forbearance recently, have positive equity in their homes today. These homeowners would likely be able to sell instead of being foreclosed on, which was not an option in 2008. Taking all of this into consideration, it is possible we could see more of a dip than a crash in home values, at least according to most experts.

Other major factors affecting the housing market over the last year are Covid19 and politics. The housing market has not only been affected by job and income losses due to lockdowns, restrictions, and mandates but also due to a major change in people's core thinking. We have seen people flocking from large and dense cities to smaller towns that offer more open space and outdoor living styles. If you have not made a move due to the market but greatly desire to, it might be worth your while anyway.

Both Covid 19 and politics have been a major influence on people's happiness lately and I have loved their solution. People in the past who would have waited for the “perfect” time to move to their dream location, have decided to make their dreams a reality. Personally, I think moving to a place you love is a wonderful way to live your best life now instead of saying “we’ll do it when…”. With all of the dysfunction and anger Covid and politics have brought about, people need to find a way to relieve the stress and improve their health. I encourage more people to make the move that will not only get them in a home that they love that has a layout that works for everyone in the family but also in a place that gets them closer to nature and areas where they can enjoy more peaceful times outside. We cannot put a value on the benefits of living an all-around happier life but we can know that they far outweigh the value of the dollars we spend on our home.

If you aren’t convinced that living in a place you love will drastically change your life; come have lunch with me at the beach or the creek, and after, when we are looking at homes, tell me if you still feel the same way.

Julie Fanelli - 843-513-8319