Is it the “worst” time to buy a house?

No one knows. The fed could give up trying to contain inflation and buying now could be a good move. Reversion to the mean is more likely though, and if that happens it would make now and the near future an absolutely terrible time to buy.

Owning a home is a complex decision. No one can tell you without knowing more about your desired market, your career and life trajectory, your financial situation and your life goals.

One thing you should not do though is to let FOMO drive your decision making process. Old folks like me remember 2006 and how strong FOMO was at the time. It seemed like most folks were going to be permanently priced out of the market.

Right now looks nothing like 2006-08. There aren't a lot of ARM loans at risk and the risk from mortgage backed derivatives is much less. That said, we face an equally serious, if not more so(!!!) set of risks that could see the US GDP decline for a while. Generally, market corrections overshoot, and given the miscalculations of the Fed over the last few years I see no reason this time will be different.

I am personally looking to buy a home and start a family but I am waiting despite being able to finally afford (barely) a house in my desired market. I think the market I'm looking at will correct at least 10% in the next 6 months. I may still delay the purchase even then just because of poor financial conditions overall. I may be wrong. I think probabilities are in line with my view, however.

If you need a house, and you can reasonably afford one that you like at today's prices, and you can cope with potentially being "stuck" in it for several years, then buy a house.

It's impossible to know what will happen. Even after 2008, when it was obvious that the market had to fall because there were >1 million underwater homes that banks were sitting on with the fed letting them pretend they were still worth the old price, it was still impossible to know exactly where prices would end up or how long it would take.

Personally, I tend to think that prices will drift downward slightly, moreso in places that are seeing big outmigration, but it's hard to say. If we keep seeing 10% inflation, then prices staying flat is actually the same thing as housing getting cheaper.

Make good decisions based on the information you can have. You will always know more tomorrow.

> I'm on the opinion of, if you need a house, buy a house - because you do need a place to live.

If you have the luxury of being able to live anywhere (e.g. 100% remote work, or no need for work), there are some exceptionally affordable places to rent housing until the market cools and it's a better time to buy. I don't think it makes sense to buy high unless you have very limited options.

When I was 25 (1985) I asked my Dad that exact question. He said, it's the worst time to buy a house and it's the best time to buy a house, and, that's always true.

I asked him what he meant, and he said, it always seems like a bad time, but you can't really ever time it perfectly. You get a house you can afford. Do the best you can, work your way up, fixing it up, selling it and moving to one that's a little better. Then you wake up 40 years from now and you'll be glad you did it.

That turned out to be true for me for sure, living in my dream home now, glad I dug deep and did it. It was tough going at first but, owning a home is still the little guy's best investment. It was true then and I think it still is.

Yes, it's the worst time to buy a house. We're at the peak of the bubble, and things are about to start heading down hill. I anticipate that people who bought within the last 6 months will probably end up under water within a year or two.

In NZ / Aus prices have skyrocketed something crazy...

People talk about supply shortages, but a) there seems to be a lot of building going on b) people will pass away c) housing density seems to be increasing d) people's wages haven't risen as quickly as house prices e) interest rates are heading upwards.

There will of course be new people coming of age and entering the market as well as immigration, but even so the price rises don't seem sustainable at all, and I imagine a lot of people will struggle to pay much higher interest rates with such high loan amounts...

This is all just an observers viewpoint - it'd be interesting to see people actually crunch some numbers on items such as I've listed above. I also believe there'll be large differences depending on location - even within the same country.

There are also changes in laws around housing- e.g. in NZ they're introducing laws to help increase density and reduce the perks for housing "investors".

There's definitely a lot going on.

Housing prices and interest rates typically have an inverse relationship. The inflation adjusted average monthly mortgage payment has been remarkably constant over the last 45 years [0], with the exception of:

1. The era of abnormally high interest rates of the early 80s. The greatly reduced demand for housing (and corresponding drop in housing prices) from 1980-1985 was not enough to offset 20% interest rates. Thus, mortgage payments were extremely high.

2. The housing bubble leading up to the 2007 crash. That time, high mortgage payments were due to abnormally high housing prices, not abnormally high interest rates.

3. The current housing bubble [*].

Whether now is the worst time to buy depends on whether rising interest rates will ultimately offset home prices. Home sales have fallen to April 2020 levels [1], but it’s too early to see a corresponding drop in prices. This may not happen for two major reasons IMO:

1. If interest rates rise to levels high enough that their effect on mortgage payments exceeds the corresponding drop in housing prices, à la the early 80s. I personally doubt this.

2. If the likely moderate increase in interest rates fails to cool the market at all. There may be enough cash buyers on the market (primarily institutional investors) that borrowing costs are irrelevant to housing prices. I find this plausible but unlikely.

[*] I am very confident that the housing bubble isn’t going anywhere without increasing total housing supply, which hasn’t met demand for the past 15 years, ever since new home construction stalled after the Great Recession (and never recovered). I doubt this will change anytime soon.

[0] https://www.motherjones.com/kevin-drum/2017/10/another-look-...

[1] https://www.census.gov/construction/nrs/pdf/newressales.pdf

It highly depends on location. Not everybody lives in the US, I find it odd that Americans rarely post their country, and just assume the location of others.

I think noone knows, really. In 2008 it was a single cause driving the prices up and then sharply down. This time around it seems to be an equation with a few unknowns: when will the war end - and how. When will china end their zero covid policy (or how will it end). What will the policymakers do if supply-driven inflation eases? Very hard to predict.

Just closed on a house in the Netherlands. I expect the prices to stagnate but not fall like they did in 2008. There is a limited supply, the demand is strong even at todays prices.

If I were looking at buying in the next 0-36 months, I would wait at least 6 months. It’s entirely possible that economic conditions continue to slide, interest rates get to 7%+ and a deep recession reduces housing demand. The opposite of all these things could also be true.

If conditions improve faster than expected, you can always quickly enter the housing search/market. Housing isn’t like most other markets that can move 20% in a day. You should be able to wait 6-12 months and closely follow the consensus on interest rates and housing market sentiment.

It mostly comes down to the fed, and their response to inflation.

If you think their response will reign inflation in check, we'll probably see the market 'crash' and a recession like the late 80s.

If you think their response will be soft, and persistent inflation is the new norm, we'll probably see the market act more like the 70s.

Maybe they walk the line, but I don't see how that's possible. Monetary policy is just so of-the-mark right now.

Another screwball is WFH. That could sap demand for large cities and push demand in suburbs and smaller towns.

I just bought a house! Like, literally yesterday. And I was recently quoted in the Wall Street Journal regarding my home buying process: https://www.wsj.com/articles/home-buyers-are-finding-creativ...

Someone in the comments there made a metaphor about "catching a falling knife." I respect this skepticism, and suspect I may have safely caught such a knife. More thoughts:

- If interest rates rise, the asset price bubble may deflate. This suggests the house's value on paper will fall — but unless the economy collapses, overall rents ought to be stable, and the cost of living on a typical property ought remain broadly similar. In the meantime, prices are still rising substantially in the area where I bought the house, notwithstanding recent headwinds in the mortgage market.

- I expect real rents to rise over the next few years, due to general supply-and-demand issues and the dearth of new construction. I expect this nationwide; I further expect them to rise in the city where I bought. This should mitigate the pressure on the value of my asset.

- I locked in a 4% interest rate. With a conforming loan of $647,200 that's something like $2200/mo in debt that's evaporating due to inflation. This is a substantial portion of the monthly payment. You will not get this good a deal, because rates are already going up. However, at current rates, you will still get free-money financing -- just not as much or for as long.

- I sold stocks to pay for my down payment. The stock market fell a good little bit since I sold. If your equity is still in equities you have already taken a hit that I avoided. (I got lucky, I guess; I also sold company stock at a very attractive price.) And note that even though stocks have fallen, they are by many measures still somewhat overpriced by historical standards, particularly if rising rates brings about a recession, which it might. If my real estate is at risk from rising rates and falling asset prices, it has lots of company. (Even a nice safe bank account is losing value daily.)

In conclusion, a lot depends on the specifics of where you're buying, how you're paying for it, and what you would do with the money instead. If you've got a wad of cash and wanted to make an all-cash offer, I'd preserve as much as you can against inflation, and save it for the recession in a year or two; you'll probably come out ahead.

Somebody is always trying to call the top of the bubble, but nobody really knows. People told me I was being stupid for buying last year after the initial COVID price surge, and still my home's nominal value is up something like ~10% since then even as interest rates have risen. Math tells you that interest rates and prices should be inversely correlated, but accounting for the changing value of the currency units themself and changing supply/demand situation is something the simple understanding can't explain. With supply still very constrained in many markets and inflation seemingly here to stay, I have a hard time seeing a large correction any time soon.

Your personal financial situation matters a great deal in the decision. I took the plunge last year because I had about ~$300k sitting in cash for a downpayment and inflation news was making me nervous. You probably don't want to be holding onto a lot of cash in this environment as dollars lose value and nominal prices continue to rise. Taking out a big debt at a moderate fixed interest rate seems like a great idea in a high-inflation environment, assuming the payments are comfortable for you to make and you don't mind staying in the home for the long term. If inflation exceeds your interest rate, the house is getting cheaper for you to own (in real terms) over time.

If I hadn't bought a home I would've been strongly tempted to throw the money back into the market. But knowing I wanted to buy a home on a relatively short timescale this would've been a very poor decision, especially looking at how the market has performed since that time.

Definitely not the worst time. While rates are going up, they are still relatively low. Back in the early '80s rates were up around 16%... that's really bad. It can get much worse than it is right now. If it happens to get better, just refinance.

Home prices will also continue to rise over time. Not the at rate we saw over the last 1-2 years, but if someone is looking to buy today and decides to wait until prices come down, they will likely be kicking themselves in 5 years.

If the reason you’re buying is because you need to upgrade your current living situation and you can afford the monthly payment then I don’t see what the issue is.

If rates go back down you can always refinance.

Given sales volume has dramatically slowed I personally wouldn’t engage in a transaction with a seller who thinks they have total leverage and force buyers to do things like waive inspection which many people do to win a house. It’s just not worth it.

Who knows? Nobody. We can guess, but even then location location location is important. As is your personal future.

Buying a house is a long term commitment, if you can't live there for seven years then it is probably wrong for you.

Around the time of the dotcom crash in 2001, my dad was thinking about buying a house, but he was insistent that housing was a bubble and wanted to wait for the bubble to burst before buying.

He was right about it being a bubble, but it still didn't crash for 7 years. It's all unpredictable but bubbles can last for way longer than you expect them to. Or they can burst at any minute.

I take the approach that if the house is for living in, and you're not a contractor or in the business of improving and flipping properties, you shouldn't try to time the housing market. Whatever happens this year, it's going to look like a good decision in 10 years if you can make the payments. Rates are still pretty low, historically and as someone else said, if they drop, you can refinance You don't buy a house because the price is going to go up. You should look at it as a lifelong investment. The wisest and wealthiest people I know live by one iron rule: You never sell real estate.

If you do make the decision to buy, though, come in as low as possible, lower than you think the seller would take, lower than your agent thinks, and see what happens. The market is softening and you want to get as much value as possible.

Aggregate statistics are most commonly reported on, and some important aspects are nationalized- Fanny and Freddie securitization above all- but housing and pricing dynamics are highly, highly localized, even to the neighborhood. That's why it's "location, location, location".

The one thing that will remain true is that fixed rate mortgages are an incredibly good deal for the buyer. Your rate and payments can only go down, not up. Astonishing such a financial product exists.

If you can get approval for a loan the payments on which you can afford- with reasonable error bars for your 10 year income- and you can find a property in that budget you can stay in for 10 years- again, reasonable error bars around how the area and your life will change- do your diligence on the property, of course, but do the deal.

Good luck.

Timing any market is a fool's errand.

One thing you can always do, though, is ignore the opinions of an interested party. Realtors are the prime example. They will always tell you that "houses always go up, and this period we're living through -- that'll be just transitory. So buy now." Ignore them.

Another thing you can always do is ignore anything you read in the press. Those reporters just have space to fill, and they know nothing. If they do know anything, it's six months out of date.

If you're sure we're in a secular downturn for housing, like after the 2007 crash, then waiting a bit will be appropriate. Otherwise, just do what makes sense for own situation, and don't worry what "they" say.

I can't predict the future.

But I think the residential housing market is due to correct.

The Federal reserve is indicating that they will continue with 0.50bp tightening at every meeting through the end of the year, and then on until inflation is under control. They're mentioning Volker and talking tough on inflation.

This is very different from the 0.25bp tightening and very measured "not too hot, not too cold" messaging from the Fed under Greenspan in 2003-2006 tightening cycle -- which still popped the housing bubble and led to the 2008 collapse.

They're going to crash the economy to get wages back under control. That means inverting the yield curve. That means CMBS probably pops and another financial crisis. The stock market is already having a massive anxiety attack about it. I can't see how residential real estate doesn't adjust.

And if the recent speculation that the only rescue for downtown commercial real estate in a remote-work world is condoizing into residential that means a flood of supply on the market.

Given rising rates it is definitely time to buckle up though.

The problem may be that at the best points to buy you may not be able to get a loan because you've lost your job.

It's really really hard to say. Not only are prices really high but I think the potential variance in outcomes that I would personally project is at an all time high. There are forces pulling the market in polar opposite directions and it's going to be a relative matter of how those forces play out.

Overall, I would buy right now if it really makes sense to you from a life perspective. I'd stay far away if your goals are speculative.

First my bias: I love owning real estate because I’m naturally insecure and place a high value on control. Whimsical landlords are one of my least favorite things. They can cripple your financial plans. (So can not planning for house expenses.)

I feel very strongly that your house shouldn’t be considered an investment, and that ideally you should buy a house you enjoy enough that even if the price dips you’ll still feel good living there long enough to pay the mortgage. Bonus: for me having a good place to live pays off because it makes earning extra money far far easier. Long after I made enough money to retire I ran side hustles because did I mention insecure ;)

Also you probably know this, but it’s ALWAYS better to buy the worst house in the best neighborhood rather than the best house in the worst neighborhood. Much likelier to preserve most of its value in a downturn and to recover afterwards.

It’s not a bad time if you get a good deal. I bought when rates were at 3.25 but I just saw a place on Zillow that probably would have met my needs for more than a hundred thousand less than I paid for my place. Compare your total cost to renting. If you can own for about the same price as renting, do it. Even if it’s not optimal every dollar you spend on rent is gone. With a mortgage at least some of that is principal.

Do we think housing prices will crash? Probably not. There’s a housing shortage.

Nah, you can always refi if rates go down (after which home values will start going up again), and if rates go up then you can be thankful you have locked in.

I never got a house till I had my second kid at age 40. I guess potentially I lost out on some appreciation, but I have never really considered a home an investment; I'd rather rent a cheap place and save more. I still don't like the hassle that comes with owning a place. But to each their own.

when you can afford it without other commitments or burdens, buy the house. Best is to have enough cash reserves. As mortgages rates are going up, job instability with layoffs underway, could result in foreclosures, also homes purchased for AirBB and other rental property may go down in demand with folks back in-person at office. Many many factors could cause a market correction for home prices to drop. So if you have cash reserves for 20% or higher for down payment, now might be a good time. You can refi it when the mortgage rates drop in the coming years.

Depends on market. And on if it is fixed rate. In those market that haven't raised too much probably still sensible with fixed rates. In more aggressively increased probably bad idea.

I wonder what it all means with today's market open. Is it opportunity to strike now, or do really be cautious and let the prices down down the next quarter.

There isn’t much bubble in the housing market. The supply simply can’t keep up with the demand. This is not the best time to buy, but not the worst either.

I think it'll get better to buy as some of the manic, easy-money business decision stuff recedes. Granted, the traders use the metric of comparing volume to historical norms as insight into whether current prices are more momentary or long term. i.e. Increased trading volume suggests valuations actually are adjusting to the new level. But that's for stocks and much more liquid assets than real estate.

Another odd-ball thing nagging at me is just population age characteristics, but this is truly long term. The boomer generation really was larger than all of its following generations by large measure. I wonder whether this could make longer term US characteristics look like Japan the last several decades for this reason.

Can you afford it?

Do you need it?

The only two questions you should be asking yourself.

If anybody could consistently give you an answer that’s better than a guess they would be billionaire investment bankers already.

The federal government needs to decide if homes are an investment or the cornerstone of the American Dream - a personal shelter one owns and cares for, a foothold to grow a family, career, and wealth.

Housing can't be both.

Policies on taxation, lending, and subsidy can be used to push the balance one way or the other.

I'd place my bets on housing prices continuing to trend up and to the left, but (as a homeowner myself) I'd be pleasantly surprised if they didn't.

The best time to buy a house, especially your house, is when you are ready. The worst time is when you are not.

If you plan on buying in a big city jump in now. If you are planning to buy elsewhere things get complex.

It is always the worst time to buy a house. This is due to the monopoly nature of location.

the worst time in about a century, in fact:

https://www.longtermtrends.net/home-price-median-annual-inco...

Compared to what alternative?

Wait six months, if prices are going to crash, they will by then

It is the best time to buy if you got a lot of cash.

yes

> if you need a house, buy a house - because you do need a place to live.

what??

I don't know. This question gets asked a lot. It depends on personal financial situation and other factors.