As the housing market intensifies and home prices skyrocket, there are concerns that the market could be entering into a housing bubble. But mortgage experts say there’s nothing to fear.
"Despite what you may have heard, we are not in a housing bubble," mortgage billionaire and United Wholesale Mortgage CEO Mat Ishbia said in his monthly video message. "The housing market crash of ‘08 was the result of a faulty foundation the mortgage industry was built upon. The CFPB implemented significant industry reforms in the following years to prevent a similar collapse from ever happening again. It’s still a great time to buy and more inventory will open up this year in Q4 and Q1 of 2022."
Whether or not you're a firsttime homebuyer and are interested in seeing what kind of mortgage you could get, visit Credible to compare rates and mortgage lenders.
Market conditions discourage homebuyers
The latest homebuyer survey report from Point2Homes showed that just 21% of house hunters plan to buy a home in the next six months, down significantly from 34% at the start of the pandemic and 53% at the beginning of 2019.
That’s because market conditions, like low supply and rising home prices, are discouraging many potential homebuyers and point to a seller's market.
About 51% of prospective homebuyers stated that they had no specific concerns when going through the buying process and that they worry more about having enough properties to choose from.
About 45% of those surveyed raised concerns that they would not be able to keep up with rising home prices. The latest CoreLogic Home Price Index report showed home prices increased 13% annually, the third consecutive month of double-digit increases.
Overall in May, the net share of consumers who say it is a good time to buy fell 20 percentage points, the largest single-month decrease in survey history, hitting a new survey low of -21%, according to the latest monthly Fannie Mae Home Price Sentiment Index.
"The ‘good time to buy’ component fell further – hitting another all-time survey low – as consumers appear to be acutely aware of higher home prices and the low supply of homes, the two reasons cited most frequently for that particular sentiment," said Doug Duncan, Fannie Mae senior vice president and chief economist. "However, despite the challenging buying conditions, consumers do appear more intent to purchase on their next move, a preference that may be supported by the expectation of continued low mortgage rates, as well as the elevated savings rate during the pandemic, which may have allowed many to afford a down payment."
To get an idea of what your monthly mortgage payment could be, visit Credible to compare current rates and get prequalified without affecting your credit score.
Current low interest rates make now a good time to buy
Despite rising home prices and fierce competition across the real estate landscape, the current low interest rates make securing a mortgage more feasible and now a good time to buy a home.
"We don’t think housing values are going to go up and then crash — that’s not realistic because back in ‘07, ‘08, ‘09 when that happened, it was all based on a cracked foundation in the mortgage industry," Ishbia said. He explained that now "people are getting loans, they can afford them, and it’s good, solid business across the board."
Home prices are not about to come crashing down, and interest rates remain at historic lows for home buyers. It could be in your best interest to search for whatever loan you're interested in, like a USDA loan, VA loans or FHA loans.
"Now is a great time to buy," Ishbia said. "On an affordability index understanding how rates and home prices come together, it’s probably not going to get any better."
If you've been saving money and are ready to buy a home, check out Credible to compare interest rates from various mortgage lenders. Using an online mortgage calculator can also help you estimate monthly mortgage payments and narrow down home prices in your range.
More homes to come to market
Later this year, experts expect there to be more inventory in the housing market, hopefully making the home buying process a little easier. With forbearance programs in place, home sales have slowed. As those forbearance periods end, much more inventory could come on the market in the fourth quarter of this year and the first quarter of 2022.
"It’s a short-term issue that’s going to get cleaned up soon, but it’s still a great time to buy right now," Ishbia said.
If you have any mortgage or home buying questions – whether you're a firsttime home buyer or have gone through the process before – you can reach out to Credible to speak to a home loan expert and get the personal finance answers you need.
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