The Housing Market Is Always Changing. But That Doesn’t Mean You’ll Get a Good Deal, According to This Redfin Economist

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Today’s housing market is different than it was a year ago. But read on to see why home buyers today still face challenges. 

It would be more than fair to say that like the stock market, the housing market has seen its share of ups and downs through the years. In the wake of the 2008 housing crisis, for example, home values plunged on a national level, forcing sellers to take massive losses. Many homeowners even wound up in foreclosure back then when they couldn’t keep up with their mortgage payments and couldn’t find buyers.

In recent years, the housing market has been stronger. During the pandemic, mortgage rates dropped to record lows, driving a huge uptick in buyer demand. That allowed home prices to soar, and in many markets, they’re still quite elevated.

That’s not true universally, though. In fact, a recent Redfin tweet quoting Taylor Marr, the company’s Deputy Chief Economist, said, “Prices are still rising quickly in some places while they are down by double digits in big tech hubs.”

But even so, the Redfin economist says, “One thing that’s true almost everywhere: It’s difficult to find a desirable, well-priced home for sale.”

Why you might still struggle to find an affordable home

It’s true that buyer demand has cooled on the heels of higher mortgage rates. That’s allowed home price gains to drop.

But it’s important to recognize that while home prices gains may be cooling, that’s not the case for every market. Also, smaller gains don’t mean no gains — so sellers are still, in many markets, charging higher prices for their homes than they were a year ago.

What makes today’s housing market even more challenging is that borrowing costs for mortgage borrowers are still high. Mortgage rates have been stuck in the 6% range since the start of 2023, and there are no signs that they’re about to plunge anytime soon.

This isn’t to say that mortgage rates won’t come down in time. But we could be years away from seeing mortgages in the 4% range. And while many borrowers were able to take out mortgages in the 3% range a few years ago, we may not see rates that low for a very, very long time.

Should you hold off on buying a home?

Today’s housing market is a challenging one to navigate, despite the fact that home prices are coming down in select markets. Higher mortgage rates shouldn’t necessarily drive you to delay a home purchase, since you can always plan to refinance your home loan once rates drop. But if you end up paying a premium for a home, well, that’s the price you’re stuck with. And it’s something you’ll need to come to terms with.

If you don’t like the idea of overpaying for a home, then this is a housing market you may want to sit out. In time, property prices should drop even more, and that may be a more appropriate time to jump on a buying opportunity.

What’s more, if the only way for you to afford a home in today’s market is to compromise heavily on the things you want, that, too, is a good reason to wait. You may end up staying in your home for many years. Buying a place that doesn’t actually suit your needs is a decision you might sorely regret.

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