Should you wait to buy your dream house?

real estate
home buying guide
Co-Authored and Reviewed by Gagan Sandhu, MBA - The University of Chicago Booth School of Business, CEO of Xillion
Posted on . 3 min read

Are you thinking of buying a home, but don’t know if it’s the right time to pull the trigger?

Surely, you might think, these sky-high housing prices need to go down soon. The typical home price in the U.S. hit around $357,000 in December, more than double the average at the start of 2012, according to Zillow research. Between November and December, home prices fell 0.2% — that’s not much, but it’s remarkable because home prices have only gone up over the past decade.

So, are things changing? Is it worth waiting to buy your dream home? The New York Times aggregated forecasts from financial institutions on the housing market.

Here’s what they had to say:

Morgan Stanley: housing prices will decline 7% between June 2022 to December 2023.

Moody’s Analytics: housing prices will decline 10% between June 2022 and summer 2024. However, Moody’s said that a recession could lead to a drop of 20%, and even more in the hottest real estate markets, such as Boise and Phoenix.

John Burns Real Estate Consulting: 10% decline through 2024.

So prices seem to be cooling off. But timing the real estate market is incredibly difficult. Housing prices are influenced by hard-to-predict factors such as interest rates, inflation, and employment rates (not to mention a pandemic causing rapid shifts in office attendance).

Right now, for example, home prices in San Francisco are falling faster than the rest of the U.S. due to things like remote work and the tech recession.

With real estate, time is more important than timing.

What does that mean?

The amount of time you own a home is generally more important than your purchase timing (whether you buy during a market upswing or downswing). Over the long term, U.S. residential real estate tends to provide a 4% return. In shorter time horizons, the markets can fluctuate drastically. If you purchased a home in 2007 and sold in 2009, chances are you lost a lot of money. But if you sold that same home in 2020, chances are you nearly doubled your initial investment.

Ultimately, it’s more important to base your decision on your personal situation.

For example, do you currently own a home or are you renting? How long do you expect to live in a home? What do you expect your income to be during the time you would own the home? Do you have cash on hand to put a large down payment on a home? Could an interest and tax deductible help offset your income tax?

Xillions’ Home Buying Tool will walk you through all of these considerations so you can make the smartest financial decision. All you have to do is plug in the numbers and find out if it is sensible to invest in the property. And if you still have questions, Xillion mentors specialize in real estate and can guide you through the decision.

A final word of wisdom: Buying a home is hard! 61% of millennial home-buyers cried at least once during their attempt at purchasing a home. Fortunately, Xillion is here to help make the process tolerable, and — most importantly — great for your financial future 🏡

To get started, set up your Xillion account today. Navigate to the Home Buying Guide to start understanding whether a home purchase is right for your journey to financial independence.

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