My personal story on why it's a great time to buy a home, despite everyone asking, "When is the housing market going to crash?"
It's actually a great time to buy a home
How can I say it's a great time to buy a house?
Home prices are up 26% since the start of the pandemic and mortgage rates are up by 0.50% since late 2021. Venerable publications like the Wall Street Journal and the New York Times publish the latest millennial homebuyer horror stories daily.
Fannie Mae says 83% of those aged 18-34 think it's a bad time to buy a house. Everyone is asking, "When is the housing market going to crash?"
It's enough to scare the H-E-double-hockey-sticks out of the average renter. "No way I'm entering this market," you're probably thinking.
The good news is that you don't have to listen to any of it.
As a homebuyer, you can be an overcomer, even in the wildest of housing markets. You might be surprised at the obstacles you can jump over, move, or crawl through Shawshank style until you've met your goal.
Three months from now, you might remember reading this article and realize that you've actually done it. You bought a home in an "impossible" market.
You have the power to do anything you want if you attack your goal like the formidable challenge it is.
You've accomplished bigger things
At the risk of sounding like a motivational speaker, I would remind you that there are plenty of other tough things you've conquered thus far in life.
Maybe you were a first-generation college graduate or got into that prestigious Master's program. Perhaps you landed that long-shot job or taught yourself to invest in crypto, NFTs, or the stock market.
You figured these things out. They weren't easy, but the most important things never are.
Why not add buying a home to the "done" column?
People tend to look at the finish line, but get overwhelmed by the many steps in the process. You start chipping away at it day by day. You beat each small obstacle and solve each problem as it arises. One day you realize that it was the first day, not the last day, that was important.
If you've seen my other writing you know that this pep talk is a departure from my norm, where I offer mortgage hacks and insider homebuying tips.
But this is a message that today's homebuyer needs to hear.
Wait, why is it a good time to buy a house?
I realize I never explained why it's a good time to buy.
If it were a normal day, I would talk about homebuyer demographics pushing prices up, and mortgage rates that are still, historically, ridiculously low. But I'll spare you the details for now.
I'll just say it's always a good time to buy a home. How so? I'll illustrate with a story of extremes.
I bought a home in June 2006. Yes, that 2006, the very top of the most inflated housing market in history, fueled by no-income, no-asset, no-job mortgages.
If you were to analyze the 2000s housing bubble and select the very day and hour that things reached the extreme top, you would find my mortgage closing sitting right there on the precipice.
Now THAT was a housing market crash.
Over the next years, my home depreciated around $150,000. I bought it at $540,000 and soon neighbors were selling in the high $300s.
Was I upset that I bought right before the crash? Yes. Would I do it again? Yes. Here's why: you can't time the market. You just have to jump in and wait for time to smooth things over.
Sure, I could have picked up a cheaper home five years later...or home prices could have kept skyrocketing. I had no idea which way it would go. But what I do know is that things eventually recovered.
My home regained its original value about eight years later. Eight years!
But during that time of "on-paper" losses, it was still a great home for me and my family to live in. It did all the things a house was supposed to do.
And, yes, there's a happy ending. Because I held on, the home tripled in value since the low point. Fifteen years later, I'm sitting on $1 million in equity. That means, between paying down the loan and appreciation, I made over $66,000 per year on average!
And, had I neglected purchasing a home, I would be paying twice in much in rent today than I do for my mortgage.
Buying a home at the top of the market was perhaps the best thing I ever did. I just didn't realize it until years later.
So yes, it's a great time to buy, because all times are great. And right now could be one of the better "great" times in history. Here's why.
The economy is spectacular
After I bought a house, the floor fell out of the economy.
I was in the mortgage industry on straight commission for a time. You could hear crickets if you held your ear up to the phone. No one was buying or refinancing. Each month that I made my mortgage payment was a victory.
Today's economy is light years better than it was back then. And it shows no sign of slowing down. There are 11 million open jobs and only 6.5 million people looking for work, says the Bureau of Labor Statistics. You're pretty much guaranteed an income these days.
And if you're worried about a crash (or waiting for one), the fundamentals just don't support it. The largest population group in U.S. history – those who are now 27-33 – are all entering prime homebuying age. There simply aren't enough houses for everyone.
Plus, lending practices are solid. This is not a boom propped up by credit. It's an employment-supported one.
All these factors lead to long-term growth in housing prices. Renters will be on the winning or losing side of that, depending on what they do in 2022.
Sure, things aren't as good for homebuyers in 2022 as they were in 2019. But people in 2019 were saying that homebuying wasn't as favorable as in 2015. The housing market always looks expensive at the time.
In 2025, people will be saying how good 2022 was to buy a home. Perspective is everything.
Time to delete the news app and buy a home
If you're like me, you use a news app on your phone. It feeds you articles similar to ones you've opened. See one doom-and-gloom real estate story and you just get more.
Today I challenge you to delete your news app. Stop looking at real estate news for two weeks.
Instead, find a great lender and see how much home you can afford via a pre-approval. Then look around in your area, or even far outside your area if you work remotely.
Then start thinking creatively about how you can win in this market. There are plenty of creative ideas like going after homes no one else wants with a renovation loan. Or paying little or no money upfront with a zero-down USDA loan. Or buying a four-plex and renting out three of the units to help with your mortgage payment.
In the words of Apple, those who "think different" will come out ahead.
Take that challenge, and you might be surprised that you're finally making serious offers on homes a couple weeks from now.