Is Now a Good Time to Buy a House or Wait?

[Timestamp 00:09]
A lot of questions are coming out, especially as we kind of round the corner of the pandemic, of: “Are we in the midst of potentially a bubble?”, or something along those lines where we’re going to see an imminent housing crash? And really, the short answer here is no. We’re not in a bubble and no, we’re not going to see a housing crash like we saw back in 2008. I kind of wanted to talk through what that looks like, and really, [email protected]:35
Really what a bubble is, is a rapid explosion in pricing where we hit a top and then it bottoms out; like we saw again in the financial crisis. We rewind, go back to 2006, and really the lead up to the financial crisis; the components that drove the market crash were really centered around 1: financing, and 2: there was a massive amount of surplus in inventory.

[Timestamp 00:35]

Really what a bubble is, is a rapid explosion in pricing where we hit a top and then it bottoms out; like we saw again in the financial crisis. We rewind, go back to 2006, and really the lead up to the financial crisis; the components that drove the market crash were really centered around 1: financing, and 2: there was a massive amount of surplus in inventory.

[Timestamp 01:05]
So, looking at the loan aspect, really anyone that had a viable credit score was eligible for financing. People were buying homes left and right. There was no cause behind their purchasing power. It’s well, “hey, I can get financing so guess what, I’m going to buy a home.” So it wasn’t uncommon for people to be in a scenario to own multiple homes – here really overextending themselves.

[Timestamp 01:31]
We fast forward to now 2021; and again, back to the question of, “are we in a bubble” and really the answer is no. If you look at the amount of homes currently for sale, compared to where we were back in 2006, we are nowhere near those numbers. Right now, the average months on market, which really dictate the type of market we’re in is less than two. So with that said, the amount of homes available for sale are just nowhere near the amount needed to satisfy the demand. That’s really one piece of the puzzle of “are we in a bubble”.

[Timestamp 02:11]
The second piece is around how the financing components have changed. Coming out of the financial crisis, Congress enacted a number of pieces of legislation to combat predatory lending and misguidances in lending. The components around financing have become very, very rigorous to ensure that the folks that are extending financing on the purchase of a property have the sufficient means to qualify for that payment.

[Timestamp 02:41]
Another factor of why now is so pertinent; as we start 2021, and closing out the Coronavirus pandemic, rates are at historic lows. There has never been a time where rates have been more favorable, which really just turn into buying potential for a possible homeowner. So here rates low, inventory low, it’s setting the stage for taking the opportunity now to jump in and act to be able to position yourself become a homeowner.

[Timestamp 03:16]
Why it’s so important to act sooner rather than later is, given the fact that inventory is so low, the amount of demand is so incredibly high that as people engage in the purchase process, we start to see that demand run-up pricing. You’re looking at a home today, say it’s $500,000 and you’re kind of toying with the idea, “Should we do this? Should we not? I don’t know, we don’t know what the future looks like.” Well, just fast forward six months from now. The expectation around home value appreciation here in Southern California is at least 7% over the next year. What that basically means is the home you’re looking at today at $500,000, over the next 12 months, that home will appreciate 7 percent or an increase in value of 7 percent.

[Timestamp 04:14]
Now we look back what happened last year, we saw 9% appreciation in the County and the expectation is where 7% is there, fully expect that number to be higher again, because demand is so high and inventory is so low.

[Timestamp 04:28]
Want to just drive home the fact that there is no time like the present. We don’t want to come across like we’re trying to sell the fact that yes, you need to jump in and buy a home. Our goal here is to educate and provide guidance around why now it is so important; fueled with low interest rates, inventory at all time lows, taking the opportunity that has been presented to be able to jump into the market and purchase property, it’s such a crucial time. We would love the opportunity to help educate and show the buying potential on your side. Please give myself and my team a call today. Thank you.

 

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