3 Reasons Not to Buy a Home This Year
by Maurie Backman | Published on Nov. 3, 2021
Have your heart set on buying in 2021? Here's why you may want to rethink that.
There's a reason buyers have been clamoring to purchase homes this year. Mortgage rates have been sitting near record lows, and there's fear that rates could begin to climb once 2022 rolls around. Buyers may be worried that if they wait too long, they could miss out.
But 2021 happens to be a very tough year to buy a home. Here are three reasons you shouldn't buy this year.
1. Low mortgage rates can't make up for inflated home prices
This summer, home prices were up 19.7% compared to where they sat a year prior, according to the S&P CoreLogic Case-Shiller Index. And that means that even if you manage to snag a low interest rate on a mortgage, you could still end up with costly housing payments on your hands.
What's more, buying a home at a premium comes with risk. If you overpay for a home and need to sell it in a few years, by then, its value may have dropped. In that scenario, you risk taking a loss in the course of that sale.
Now, no one can say for sure that home prices will come down in 2022, but many housing experts believe home values can't really go up from here. Rather, it seems likely that they'll slowly come down. So if you sit tight, you might pay a lot less.
2. Inventory is very low
Right now, the housing market is short by more than 5 million homes needed to meet buyer demand. And that means you might struggle to find a suitable place to buy.
There's no guarantee that inventory will increase substantially in 2022. But more homes have gradually been hitting the market since the summer. If you put your search on hold, you could end up with a lot more choices.
3. There's still a pandemic
What does the COVID-19 outbreak have to do with the housing market? A lot, actually. Many housing experts think the reason so many people aren't selling these days boils down to pandemic-related uncertainty. And when we review the events of the past 19 months, who could blame them?
Last year, many people spent months living in lockdown while the widespread economic shutdown drove the jobless rate to a record high. Things have improved since then, but there's still a pandemic raging. So it makes sense that prospective sellers would want to wait things out rather than deal with the stress and hassle of listing a home.
But come 2022, the pandemic may look different. We may have more booster shots, new treatments, and other weapons in the fight against COVID-19. And homeowners may be more comfortable listing their homes at that point. Similarly, you may want to buy a home when the world (or at least the country) is a bit more settled.
It pays to wait
If you find your dream home this year at a price you can afford, then it could be worth making an offer on it. But otherwise, you may want to write off the idea of buying a home in 2021 and focus on 2022 instead. Doing so could mean paying less for a home, getting more of a selection, and making a huge financial commitment at a time when things are more settled all around.
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