The Expert Podcast

Buying a primary residence has been fraught with peril for many years—prices have been high, bidding wars, and interest rates. But now, according to some experts, the housing market may be in a recession, and buyers might have what's called a small window to get a good deal. This deal may not only have to do with price; it may have to do with other terms of the purchase. For example, in 2021, the prices of real estate were actually less than they are now for the same house.

So why is it better to buy a house now? The reason is that for the same price, you now have multiple options to buy a house. In 2021 or 2020, you basically had to take whatever you could get, and many buyers purchased real estate that wasn’t their dream home or first choice. They bought a house just because it was available and they needed a place to live or wanted to be an owner, not a renter. If you only had one or two houses available and there were bidding wars, you had to take whatever was available at that time in that window of opportunity. Now, you can sit back and look at multiple properties because there’s a lot more inventory available.

Number two, which is probably even more important, is that you now have the ability to have contingencies on your contract. This means you can have a mortgage contingency, so you don’t have to pay cash or waive your mortgage contingency. You can also do inspections on a property. There are a lot of surveys coming out where buyers of real estate in the last year and a half or two years are having buyer's remorse because they found out there were problems with their house or they didn’t like it as much as they thought. This is because they didn’t have time to think about it, see how it matched their family. Usually, when you buy a house, you might have days or weeks to think about that house, look at the yard, look at the neighborhood, the condition, and pick something out that matches exactly what you want. Buying a house is not like buying a shirt at the store, where if you don’t like it, you just buy another one or not wear it as much. A house is something you live in for many, many years—maybe 10, 15, or 20 years. So, if it’s something you don’t love, you’re going to have a problem because you have to deal with it every day, not something you can replace easily.

This current market, with more inventory, might be a great opportunity to look around and find exactly what you want—the floor plan, the neighborhood, the yard, the view, whatever it is that you’re looking for—and be able to perform due diligence on that property. You can have an inspection, an appraisal, and look at comparison properties. Even if you don’t buy another house, you can compare it to other houses. The price is still going to be relatively high. Prices are not going to crash down below what they were in 2020 or 2021 or maybe even 2019. They’ll stay at the same level; they may not jump up as much, and maybe the high end of the market might kind of back off a little bit, but the price is not going to go down too much.

The interest rate is higher too, but don’t worry about the interest rate because interest rates can change. If the rates go down in the next two, three, five, or six years, you can refinance. If the rates go up, your rate won’t go up because you’re already locked into a fixed rate. So, the interest rate is not as much of an issue as the price because the price is something you’ll live with forever, and the house is something you’ll live with forever. In fact, the house is probably more important than the price because you can make more money or change your budget, but you can’t change the house unless you rebuild it.

According to this article and many other examples, there may be an opportunity in the housing market to buy a house where, in the future, rates might go up more, which they probably will. This slight pause in the price appreciation of houses might also change. Right now, prices are kind of stagnant; they’re not going up. Some people are reducing prices, but that might change too. In the next year or two, the prices might start to climb again as people get used to this new market. Some experts are saying this might be an opportunity to get into the market, buy a house, and get something you love because you can look at other options besides just the one "take it or leave it" house that people have had to do for a long time.