After more than six years of steady home price increases, recent data shows the real estate market is slowing. If this is the start of the next housing crash, it is human nature to doubt your purchase, thinking you could have paid much less.
With the previous financial crisis and housing meltdown just passing its 10 year anniversary, many might ask whether you should wait for the next housing crash before purchasing your home. The real estate experts at NAEBA think this is unwise.
Another Crash May Never Come
The recent crash our nation experienced could be an anomaly; there hadn’t been another economic downturn that severe since the Great Depression in 1929. You may be waiting for something that will never come again in your lifetime.
There were many factors that came together that caused the Great Recession, beyond just a sharp run-up in real estate prices, including lax lending standards, particularly among subprime borrowers, regulations that did not keep up with the market, and inflated credit ratings from agencies such as Moody’s and S&P that fueled packaging mortgages into various securities. Lending standards have tightened and banks are under greater regulation, including stress tests that the institutions must pass.
In short, if you’re waiting for the next severe housing crash, you may never purchase a home.
Your Local Market May Not Be Affected
Collapsing real estate prices receive a lot of nationwide press. However, a severe national crash doesn’t affect all states, cities, and towns equally.
A decade ago, Nevada and Florida were two of the hardest hit states, with price declines reportedly greater than 40%. Other municipalities did not experience such a severe downward trend and some even experienced pricing increases based on other factors.
You may not live in an area that is hard hit should a severe housing crisis come again.
You Own Finances May Change
Should the economy tank, your own financial circumstances may change. You may face the loss of a job, or you may find that you need to help a relative get through a difficult financial time.
While you try to prepare for these scenarios, an economic downturn, particularly a severe one, has a way of upending your plans.
Are you ready to purchase a home?
If you are emotionally and financially ready to make a home purchase, you should go for it! A NAEBA-listed real estate agent can help you make an offer based on the property’s current fair market value (FMV). An agent can help you compile this by using current comparable sales, among other information.
No one can precisely predict the future. You can only use the current information to make the best deal under the current circumstances.
Your exclusive buyer’s agent is on your side. He or she will work with you to determine the FMV and help you compile an offer. Remember, an exclusive buyer’s agent owes his or her fiduciary duty to the buyer. The National Association of Exclusive Buyer Agents (NAEBA) has a Code of Ethics and Standards of Practice that agents must follow to ensure you receive the service and professionalism homebuyers deserve.