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A lot of homebuyers are still sitting on the sidelines, waiting for home prices to drop.
Some are waiting for a crash so they can get a better deal. Others are worried they’ll watch their home’s value drop if they buy now.
Nobody wants to feel like they overpaid or bought too early. But there’s an important question to ask:
What if the crash you’re waiting for never happens?
Based on the latest data from experts, a nationwide housing crash isn’t on the horizon.
Experts Are Not Predicting a Housing Market Crash
You’ve probably seen headlines or social media posts lately saying home prices are about to come crashing down.
It’s true that some markets are seeing small price declines. But a local price shifts are not the same as a nationwide housing crash.
According to Realtor.com data, home prices are still rising in 71% of housing markets across the country.
Unfortunately, negative news tends to get more attention. Stories about price declines in a handful of markets can make it seem like prices are falling everywhere, even when most markets show the opposite.
So, how can buyers get a clearer picture of where home prices may be headed?
One trustworthy source is the Home Price Expectations Survey (HPES) from Fannie Mae.
The 5-Year Home Price Forecast
Each quarter, the HPES asks more than 100 economists, housing experts, and market analysts where they believe home prices are headed based on the most current data.
Even amid today’s ongoing market uncertainty, these experts agreed on one key point:
They do not think a housing crash is coming.
Instead, the average of their forecasts shows home prices rising every year for at least the next five years.
The expectation is for home prices to grow at a more normal pace, unlike the spikes we saw five years ago.
Even the Pessimists Expect Growth
One reason the HPES is useful is that it doesn’t only include optimistic forecasts.
Researchers divided the panel into groups based on how bullish or bearish they were regarding the housing market. Even the most pessimistic group still forecasted that home prices would climb over the next five years.
- The Optimists: Forecast roughly 4.0% annual growth.
- The Pessimists: Forecast roughly 1.0% annual growth.
- The Average: Expects 2.6% annual growth.
The current debate among housing experts isn’t about whether prices will crash, but rather how much they’ll rise.
That is very different from what many buyers may be seeing on social media.
Waiting for Prices To Fall Could Cost You
If you’re waiting to buy until prices come down, you may be disappointed.
Based on the HPES forecast, a buyer who purchased a $400,000 home this January could gain nearly $40,000 in equity over the next five years from appreciation alone.
Of course, that is based on a national forecast. Real estate is local, and every market behaves differently.
But broadly speaking, the risk for buyers may not be buying before a crash. It may be waiting for a crash that never happens.
Depending on your specific market, holding off could mean missing out on considerable equity or having to pay tens of thousands of dollars more for the same house five years from now.
Bottom Line
Many buyers are waiting because they believe home prices will fall, but that’s not what experts are predicting.
Home prices are expected to rise more moderately over the next several years, and even the more cautious experts don’t expect a major drop.
Before you put your plans on hold, talk with a local real estate agent who can walk you through what’s happening in your market and help you decide what makes sense for your next move.
