Graham Stephan Says 'Don't Buy a Home in 2022.' Is He Right?

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  • Today's real estate market features high home prices and a lack of inventory.
  • It could pay to delay your home-buying plans, especially if you're struggling to find an affordable home to purchase right now.

It's a tough housing market. Should you take a step back?

Buying a home can be a smart financial decision. When you own a home, you get to build equity in an asset that could gain value over time. Plus, homeownership can lead to more stability, as you won't have to worry about a landlord deciding not to renew your lease. And unless you buy a home that's part of an HOA, you don't have to follow any rules, whereas when you rent, you may be barred from having a pet or conducting business out of your living space.

But while buying a home is generally a solid financial decision, right now, financial guru Graham Stephan insists that it's a really bad time to do so. And you may want to heed his advice.

Why now's a bad time to buy

These days, home prices are sky-high, and that's largely due to a lack of inventory. Any time you have a situation where the supply of a given product can't keep up with demand, its price can rise.

That's what's been happening in the housing market. Buyers have been forced to chase the limited number of homes being listed, resulting in costly bidding wars. As such, the prices we're seeing today are record-breaking -- and not in a good way (at least for buyers).

Compounding the problem is that mortgage rates have risen substantially since the start of the year, and they have the potential to keep climbing during that latter half of 2022. Historically speaking, today's rates are more favorable than the rates borrowers faced decades ago. But compared to the ultra-low rates we saw from mid-2020 through late 2021, today's rates seem like a rip off.

Now it's one thing to get stuck with a higher mortgage rate at a time when home prices are reasonable. But that's not the case today, which is why Stephan insists that 2022 is not a good time to buy a home.

Should you wait to buy?

If you're in a terrible situation as a renter -- your landlord keeps raising your rent, you're subject to strict rules that are impeding your lifestyle, or you can't remember the last time your building manager fixed something in a timely fashion -- then you may want to try to buy a home sooner rather than later if you have the money to do so. But otherwise, it could pay to keep renting a while longer and wait for the housing market to cool off.

If you buy a home right now, you're likely to get stuck with:

  • A high purchase price
  • An expensive monthly mortgage payment
  • A home that doesn't have all the features you're hoping for

On the other hand, if you wait for the market to cool and then buy, you're likely to get:

  • A home that's priced more fairly
  • A monthly mortgage payment that's manageable
  • A home that checks off all the right boxes

If the latter scenario sounds better to you, then it pays to delay your home purchase beyond 2022. At some point, the housing market is apt to cool off. And if you keep boosting your savings, you'll put yourself in a prime position to pounce when it does.

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