Should I buy a house in a seller’s market?

Introduction

In this article, we will discuss whether you should buy a house in a seller’s market. We will explore the financial and economic factors you should consider when making a buying decision in a seller’s market. We will also discuss how to cope with the potential anxiety and financial pressure when buying a house worth over a million dollars in a seller’s market.

Factors Influencing the Buying Decision

When the real estate market is active and thriving, it’s great to be a seller because you’re likely to sell your home for much more than you originally paid. But I can understand your anxiety as a buyer: after paying a substantial amount for a new home, will you recoup that amount when you decide to sell in the future?

The truth is, there is no clear answer to this question, as it depends on a variety of factors such as when you sell the home and the overall health of the economy at that time, which will determine mortgage interest rates and home prices. But just like the stock market, you cannot time the real estate market. Will the real estate market be down when you want to sell? Perhaps. But it could also be on the rise.

Potential Effects of Economic Recession

However, when there are signs that the United States may be heading toward an economic recession, it’s likely that the price of the home you purchased for a million dollars at the peak of the market will decrease. For example, during the last economic recession in 2008, it took the real estate market about a decade to recover.

Are you planning to sell within 10 years or more? The longer you can wait to sell that new home, the more likely you are to be able to sell it when home prices rise, which puts you in a better position to make a profit. But if you’re only planning to hold onto the home for a few years and lack flexibility, it may be better to buy a less expensive home.

Managing Anxiety and Financial Pressure

But above all, I have a significant concern here that you may be stretching yourself too thin in an attempt to buy a new home in a seller’s market and that in the end, it may not be worth it. In fact, there is never a guarantee that the home you buy today will be more valuable tomorrow. Would you feel more comfortable if you spent less on the new home? Perhaps if you are more selective in the home you buy, you might feel more at ease about the purchase price because you would be buying a home that you truly love and consider worth what you paid.

If you can deal with the discomfort of spending a lot on a new home, you may find yourself less anxious about home prices when you finally decide to sell.

Good luck!

– Kristen

If you have questions about money, Kristen is here to help. Submit an anonymous question and she may answer it in a future article.

Sources

The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we fact-check and maintain the accuracy, reliability, and quality of our content.

National Bureau of Economic Research. “The Job Market View on the Risks of a Hard Landing in the U.S.”

CoreLogic. “Special Report: Assessment of the Real Estate Market Since the Great Recession.”

Source: https://www.thebalancemoney.com/should-i-buy-a-house-in-a-sellers-market-5272037