Towards the end of last year, Zillow and Pulsenomics conducted a survey of 117 of the top economists around the country to find out what their projections were for the housing market in years to come. But before we get into the finer details of that survey, lets discuss what is largely happening in the mainstream media and on many national platforms…
Fears of a housing crash have been circulating for the past year or so. Following two years of historical gains for homeowners, many believed that level of appreciation was not sustainable. And while they may have been correct – 20% year over year appreciation is not sustainable, the belief that there would be a 20% or greater decline in home values was just simply unfounded. When you break down individual markets across the country, there is no doubt that some markets will experience a pull back in prices. However, nobody that pays attention to the data is predicting a decline of that magnitude. The simple answer is because of the fundamentals of supply and demand. Nationwide, the average of months supply of homes for sale is around 2.7 — in a balanced market that number would be 6 months of inventory for sale. Locally here in Northwest Vermont – that number is 1.1.
So why mention that? Because context matters when talking about purchasing a home in today’s market. For many buyers, including the biggest buyer pool (millenials) this country has ever seen, the rise in home prices have made it really difficult to purchase a home. However, the results of this survey are telling for anyone who is waiting on the sidelines, hoping to time the market and get it while its down. My advice to you, based on the projections of 117 economists, is to purchase something sooner rather than later. If you hold onto that home for five years, you could experience somewhere in the ballpark of 23% appreciation.
For example – if you were to purchase a home today for $400,000 and lived there for 5 years, you would gain $92,000 in equity. I write this today, not to persuade you to purchase a home, but to give you a lay of the land and to set the table so that you are the most informed you possibly can be. For many people, they just changed jobs, got laid off, moved states, got divorced, lost a loved one – the list goes on and on. Everyone’s situation is different. But if you’ve been poking around the market and pondering whether now is the right time? Don’t wait to buy real estate. Buy real estate and wait.