Tuesday, May 18, 2021 / by Vyral Marketing
Many people are asking if they should purchase a home if there's a coming price correction in the future. I’d like to discuss the ramifications of buying a home now even if there's a potential downturn in the market in the future. I’d also like to go through a little bit of a demonstration of what could happen with prices based on the current trends.
Over the last year, we've seen prices appreciate about 30% and many people are concerned if that continues then prices have a good probability of going down. Let's take a look at a scenario of somebody looking to buy a home for $400,000 right now. They may have been able to purchase that home for under $300,000 a year ago and feel like they're overpaying if the current trends continue. However, if an additional 30% appreciation occurs, they could be looking at the same house being valued at over $520,000 a year from now.
"You may say 'I'd love to buy when prices go down 10%,' but will you want to purchase if prices go up 40% in the next year?"
Let's say that at that point there was a correction. If there's a downturn of 10% at that point, the property that was $520,000 a year from now would then only be worth $470,000. If prices start to go back up again, would you rather purchase something now for $400,000 or be looking at a property that's worth $470,000 two years from now?
I think you can get an idea of what may happen currently with the way that homes are trending in prices. The appreciation rate is above 30%. It's possible that it will get above 40% over the next year. You may say “I'd love to buy when prices go down 10%” but will you want to purchase if prices go up 40% in the next year?
Every person’s situation is a little bit different, so feel free to reach out to me. I would love to chat about your buying needs and if you know anyone who is looking to purchase a home in the next couple of years. I'd like to discuss their situation and make sure that they are making the best-informed decision.