Should I Buy a Home Now Or Wait?

Despite What You Hear in the Media, our Housing Market is not Currently Crashing

Is the housing market correcting? Most definitely. To see what is actually going on you have to consider what the most recent data is telling us.  Home prices appear to have stabilized and, in some areas, decreased marginally. This year new construction Permits and Starts have decreased year over year but have increased month over month. The reason for the cooling in the housing market compared to the last 2-3 years has to do with things like rising interest rates, the potential economic recession, and sensational media reports regarding the state of the housing market in general. When analyzing the sales volume for Single-Family homes in Sarasota, even with all of those headwinds, the sales volume for the first 4 months of the 2023 season appears to be in line with sales volume for the same time period in recent years leading up to the effects of the pandemic (2017-2020). (See data below.)

Does a recession automatically mean housing crash? No. There have been recessions in the past 40 years where housing prices were not negatively affected. Has the housing market been negatively affected in previous recessions? Of course. When you hear discussions on the housing market by media pundits, they are usually speaking in general about the entire housing market nationwide. Florida is certainly an exception.

Who is still buying homes while the media is telling everyone the “economy is bad” and “housing market crash is imminent”!?

Why are contractors still building houses if a recession is here/coming and we are in a “bad economy”?

Should you buy now or wait?

The housing market is mainly controlled by two factors: supply and demand, just like every other product. If the supply is high prices tend to stabilize, but if supply is low prices tend to increase. The other factor when analyzing the housing market is how fast consumers are buying homes (demand). If people are buying homes at a fast rate, prices tend to increase. If people are buying homes at a moderate rate, prices tend to stabilize. If people buy homes at a slow rate, prices tend to decline. Today our housing market inventory count is low and unbalanced, and even though buying has slowed, prices have stabilized mostly – and in some areas decreased only slightly. If the market becomes flooded with homes and buyer demand goes away, that is when we really should be concerned about our local housing market crashing.

Who is still buying a home in this climate? 1) Qualified buyers who couldn’t buy in the heyday of 2021-22 because demand was too fierce, 2) baby boomers and 3) investors. Who isn’t buying today? 1) People who are priced out because of rising interest rates, 2) people still waiting for the perfect home to hit the market and 3) those who have been paralyzed by media reports and are skeptical about where the housing market is headed.

Why are new home contractors still building? Simple answer: people are still buying! As the interest rate rose last year new construction contracts slowed. This was intentional and expected. More recently after sales predictably declined, they have stabilized and even started increasing again as Permits and Housing Starts have increased month over month recently. Most large tract builders in our area wait until they get a buyer contract before applying for permits. Speculative building is not as common in our market.

*Data released May 17th, 2023 - U.S. Dept. of Commerce

Should you buy now?

If you are not buying because of the higher interest rate but you can still reasonably afford a mortgage payment, you can buy now and refinance when the interest rate lowers.

If you are not buying because a recession could affect your livelihood/income, you probably should wait a year and then re-evaluate.

If the demand remains moderate and inventory stays low, prices will remain stable.

I can tell you this, there are good deals to be made right now. 99.9% of my buyers in the last 8 months have paid anywhere from a 5%-15% LOWER price than list price. (This does not include incentives or repair dollars I have also negotiated for those buyers.) The most desirable properties today are the ones that have been built or updated within the last 3-5 years. If you find a property that is outdated, and you don’t mind putting a little work in you have an opportunity to get a great deal. Having the right agent help find that property and negotiate a great deal helps also. That is why I am here!

Call anytime!