The Plan That Has Not Worked for Almost Two Decades

I am going to wait for the housing market to crash and then I will buy a home. Have you heard that recently? Have you thought it yourself?

Here is the reality check that nobody waiting for a crash wants to hear. If you have been waiting for the market to crash since 2008 you have been waiting for almost two decades. And during those two decades the homes you were waiting to buy cheaper have grown in value by tens of thousands of dollars while you have continued paying rent toward someone else's mortgage rather than your own.

The crash that was supposed to create the buying opportunity has not come. And the equity that homeowners have been building this entire time has not gone to the people who were waiting.

Why 2008 Is Not Coming Back

Economists are not expecting a repeat of the 2008 housing market crash and understanding why matters more than simply taking that statement on faith.

The 2008 crisis had specific causes. Lending standards that were dangerously loose. Mortgages given to borrowers who could not realistically sustain them. Home prices inflated by speculative demand and easy credit rather than genuine housing need. When those foundations collapsed there was nothing underneath to hold the market up.

Today's market looks fundamentally different on every one of those dimensions. Homeowners have strong equity built through years of appreciation and consistent principal paydown. Foreclosure rates are low. Lending standards have been significantly tighter since the qualified mortgage rules went into effect after 2008. And the housing shortage driving prices in most markets reflects genuine demand rather than speculative excess.

Could prices level off in some markets? Absolutely. A modest correction in overheated local markets is different from the broad catastrophic decline of 2008. Waiting for the latter while the former plays out is not a strategy. It is an indefinite delay with a compounding cost.

What Waiting Has Actually Produced

The buyers who have been waiting since the last crash for the next one have watched the market deliver the opposite of what they were waiting for. Values have increased. Equity has accumulated for owners. Rents have risen consuming the savings that were supposed to fund the eventual down payment on the eventual crash purchase.

The crash has not come. The equity has not waited. And every month of continued renting has been another month of paying someone else's mortgage instead of building your own financial position.

What to Do Instead

Stop waiting for a market event that economists are not projecting and that history suggests is not imminent. Call Caleb Patton at Broker Brothers Mortgage to find out what you actually qualify for today. Get pre-approved and find out how close you actually are to buying instead of continuing to guess that you are not close enough.

Follow along for more information and reach out anytime to start the conversation.

Sources

NAR.realtor
MortgageNewsDaily.com
FederalReserve.gov
ConsumerFinancialProtectionBureau.gov
Investopedia.com