[S2-E26] When Will Be a Good Time to Buy a House?

2022-02-02·4 分鐘


Source: https://www.theatlantic.com/family/archive/2022/01/when-good-time-buy-house/621409/

When Will Be a Good Time to Buy a House?

There won’t be a perfect moment anytime soon—but that shouldn’t stop you if you’re ready. By Joe Pinsker

So far, shopping for a home in the 2020s has been obscenely competitive. Here are three statistics that capture just how zany the housing market has been:

From late 2020 to late 2021, American home prices increased an average of 17.5 percent—more than twice as much as in a typical year during the 2010s. (In some places, such as Boise, Idaho, and Austin, Texas, prices went up more than 30 percent.)

In late 2019, the median number of days that a house was on the market was 51, according to the real-estate site Redfin. In late 2021, that number was 24.

Meanwhile, almost two-thirds of people who bought a home in 2020 told Redfin that they submitted an offer on at least one house without having seen it themselves.

In other words, houses have been selling at higher prices, more quickly—and buyers haven’t been able to find much relief by broadening their search to other areas, because this is happening in much of the country. “This is one of the more universal periods of zaniness that we’ve seen,” Issi Romem, the founder of the economic consultancy MetroSight, told me.

Under these conditions, many first-time buyers are likely wondering: When will the housing market settle down? And if I want to buy a house soon, is it wisest to dive in now or wait? Based on my conversations with housing experts, the short answers are: “It’ll probably calm down a bit this year (but it’ll still remain kind of wild)” and “You don’t have to wait (but don’t do something rash because of the frenzied market).”

Even though home prices soared during the pandemic, the pandemic wasn’t the underlying cause—there’s been a longer-brewing imbalance between supply and demand. On the supply side, the number of houses being built in the 2010s was about half of what it was in the early 2000s, which means fewer houses available now. On top of that, Baby Boomers are staying in their homes relatively late in life, which further restricts supply. Meanwhile, demand has been propped up by low interest rates (which make it cheaper for buyers to borrow money) and demographics (Millennials, who are aging into their peak home-buying years, are a relatively large generation).

Take these together, and you end up with more people wanting to buy houses than there are houses to buy. Freddie Mac, the government housing-finance company, has estimated that at the end of 2020, the country was some 3.8 million homes short of meeting the demand of both buyers and renters.

The pandemic didn’t produce this imbalance, but it did exacerbate it. Supply was temporarily hindered by a coronavirus-related pause in construction and by supply-chain-related shortages of building materials. And demand for spacious suburban houses was pushed upward as many Americans, especially remote workers, turned their attention away from downtown urban areas.

But even as some of those factors fade in importance, the underlying shortage of housing will persist. For that reason, the experts I spoke with recently didn’t expect that prices would stop climbing anytime soon, though they did expect prices to climb less steeply in 2022. Indeed, the latest projection from the National Association of Realtors, a trade group, is that price increases this year will be about one-third of what they were last year.

One thing that could somewhat dampen price increases—as well as the bidding wars that have pleased homeowners and exasperated buyers—is a rise in interest rates, which is expected to happen this year. If that rise is sharp, “that will take away one of the fuels for this fire,” Chris Herbert, the managing director of Harvard’s Joint Center for Housing Studies, told me. The idea is that higher rates make borrowing more expensive, which reduces the amount people are able to spend, which in turn pulls home prices down. (Herbert also noted that if a recession were to hit, that would probably dent home prices—though that would obviously come alongside other bad effects.)

If you could magically choose what the market is like when you buy a house, you’d maximize your wealth and minimize your stress by picking a time when prices are low and going to shoot up in the future, when interest rates are low, and when you don’t have to make a rushed decision or enter a bidding war. The competitiveness of today’s market means that now is not that magical moment. But realistically, identifying the perfect time to buy is impossible because perfect timing is clear only in retrospect. “It’s hard to game the market—you’re bound to fail a lot of the time,” Romem, of MetroSight, said.

Herbert recommended a different way of thinking about the timing of buying a house, one that I found much more comforting. “You ought to be making this as a housing decision and not an investment decision,” he said. If you’re buying a house, he advised, it should be because you want to live in it for at least five years, and ideally many more—which also will mean that even if prices fluctuate, you have a better chance of your investment appreciating over time. “The longer you stay in the house, the [less] your timing in this particular house-price cycle [will] matter,” he said.

Waiting for the market to settle down isn’t likely to help you. “There’s not going to be an optimal point when prices dip and you can jump in,” Jenny Schuetz, a senior fellow at the Brookings Institution, told me. What’s more important is whether you personally are in the financial position to buy a home. If you are, now seems as fine a time as a year from now to do so.

One big caveat is that in many markets, demand has been so high—and supply, so low—that some buyers have been willing to waive the contingencies on their offer, such as finalizing their purchase after a home inspection. Schuetz advised against doing this, because it’s risky. “If everybody else is buying in a frenzy, that doesn’t mean you should buy in a frenzy too,” she said. “Some of the people who win those bidding wars may not have made good decisions.” Better to insist on the usual contingencies, even if that means postponing your purchase or finding a different house.

This approach to home-buying is not meant to discount the very real consequences of purchasing a house at a suboptimal time. If you buy too late, for example, you may end up losing out on additional square footage, a shorter commute, or increases in the value of your house.

Or you may not. The point remains that, in the moment, you can’t know when will be the best time. So set that strategizing aside and try not to think about it—if you buy a house and stay there for a while, you’ll be better positioned to ride out whatever wildness the future holds.

Joe Pinsker is a staff writer at The Atlantic, where he covers families and relationships.

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