For the past 2 to 3 years, the housing market 🏡 has been marked by staggering sales and low inventory, resulting in real estate being a red-hot commodity. But will it last? That is the question that needs answering. Lance Lambert with Fortune.com says, “There’s a growing chorus of economists speculating that if home price growth doesn’t abate soon, the housing market could eventually overheat. Or worse: We could wind up in another full-fledged housing bubble.”

Table of Contents

How Does This Affect A New Home Buyer?

1. Another Housing Bubble?

2. Economist Predictions

3. How Does Slowing Down Affect The Buyer?

What Should You Do?

How Does This Affect A New Home Buyer?

No one wants a housing bubble. After all, if there is a bubble, it will eventually pop. That is bad for everyone 😔. Unfortunately, there is not a whole lot that the average homeowner can do about that scenario. Other than planning for a potential loss of value, life must go on. To that end, homeowners should know what the market is doing to arrange their affairs accordingly.

  1. Another Housing Bubble?

Do the signs point that way? Yes. But does it mean a bubble? Probably not. The Federal Reserve Bank of Dallas released its findings in March of 2022, causing “shockwaves through the industry,… stating, “The U.S. house prices are again becoming unhinged from fundamentals,” as per Lambert. However, although the signs might be similar, the individual homeowner situations are different. Primarily, subprime mortgages are not a concern as in 2007, and disposable income for the average homeowner has increased substantially from 2007 to 09.

      2.Economist Predictions

A quick google search will show that current mortgage rates for a fixed 30-year loan are at 5.6%. Earlier this year, we were at 3.5%. According to CoreLogic, home prices have increased, growing about 20% from March 2021 to March 2022. Despite this, there are signs the market may be cooling down. However, buyers should not expect great deals soon. Holden Lewis notes, “Home prices will keep going up because there aren’t enough houses available to meet demand, but rising home prices and elevated mortgage rates mean fewer people will be able to afford to buy.”

     3.How Does Slowing Down Affect The Buyer?

Primarily, slowing down means more inventory and fewer bidding wars. We all know someone who bought a home in the last two years and had to bid way above the asking price 💲. And then they might even lose to someone else. With the rise of the inventory, we are seeing sellers being forced to lower their asking prices. Redfin reported that 15% of sellers lowered their asking prices last month.

What Should You Do?

Yes, the market is all over the place right now. And yes, many were negatively affected by the last bubble we had. Fortunately, we believe that will not happen again. Taylor Marr, chief deputy economist at Redfin, has excellent buyers’ advice. “Just because economists predict that interest rates will go higher, this doesn’t mean buyers should force themselves into a bidding war 💰 just because they’re panicked about interest rates. “If you find a unit that’s right for you, and you know it’s a place you’re going to stay for an extended period, then you should move forward,” she says. “But you don’t need to hurry to lock down a rate.”

Ironwood Homes is committed to providing residents of Fredericksburg, Virginia, and the surrounding areas with homes that they love. We want to build houses that you can easily call home through quality workmanship and attention to detail. If you are thinking about building, give us a call and allow us to help make your “home dreams” a reality.