Should You Buy A House Now Or In 2024? Check Out The Experts’ Predictions
Buying a house or apartment is a significant challenge because it involves spending a large sum of money. Should you buy a house now or in a few months? Will mortgage rates change? What are the possible scenarios in the housing market?
Real estate market in 2022
The housing market has seen almost continuous increases since 2009. The prices of apartments, houses and building materials are surprisingly high, but despite this, demand for new buildings is still high. Although in June there was a reversal of the trend and apartments began to get cheaper, there are symptoms pointing to further increases.
Real estate market predictions for next month do not fill buyers with optimism, as according to experts, the chance of a drop in housing prices in developed countries (European Union, UK, U.S. and Canada) is slim. In our article about the cost of living in States., we even mentioned that the cost of renting and buying real estate consumes a large portion of household budgets.
What affects real estate prices?
If you've read our article on gas prices, you may remember that the price of any good depends on two factors: demand and supply. It is exactly the same with real estate.
First, let's look at the demand for real estate. As factors shaping demand, we can mention:
- Inflation: when prices rise, people don't want to save money. Instead, they prefer to spend it on various goods that have a fixed value.
- Demographics: although global population growth is not even and many countries are experiencing population decline, in many markets this is critical. Simply put, people need to have somewhere to live
- Pandemic: Life is returning to normal in many countries. Students have returned to the cities where their universities are located, there are less and fewer people working remotely and sometimes they have to move
- Mortgage rates: central banks in many countries have carried out interest rate increases that, rather than reducing the amount of lending, have primarily caused major changes in exchange rates. This is because the vast majority of loans have interest rates below the rate of inflation. This means that it is more profitable to buy an apartment with borrowed money than to save for it.
- People consider the purchase of an apartment as a step towards financial freedom, believing that it is better to own something than to rent.
Unfortunately, supply has also been disrupted. Problems with the availability of real estate are just as important as problems with excessive demand for it. We think the biggest cause of the problems are:
- Global supply chains have been broken by a pandemic. While this may seem strange, we are still struggling to date. Also, not insignificant is the war in Ukraine and the sanctions that have been imposed on Russia
- The global economy is struggling with a shortage of construction workers. Many companies are offering better and better rates, but there are still not enough people.
- Inflation also affects the prices of materials such as steel, and high energy prices increase the cost of producing construction materials. Check how to fight with inflation HERE.
If you are thinking about buying a house or apartment, you will probably need to borrow money. The interest rate on a loan has a huge impact on your willingness to buy, and it's a good idea to estimate the risk associated with changing it.
Although modern window and thermal insulation models reduce heating costs, and photovoltaic panels reduce living costs and protect the environment, you have to invest money in them.
Finishing standards are also improving. More and more developers are using premium materials, which further increase the price of apartments and houses.
Ok, so should I buy a house now?
The answer is not simple, but the forecasts for the next few months are not very optimistic. Everyone recognizes that real estate prices in many parts of the world are far too high, but the future could be even worse.
If you have a high propensity to take risks, you can wait for a crisis to occur. If the 2008 scenario repeats itself, you may be able to find a very cheap apartment for yourself. Keep in mind, however, that the real estate market crash may not occur until 2024 or 2025.
If you don't like risk, buying a property in 2022 seems like a better idea, although it's definitely worth considering renting an apartment for the next few years and investing your money over that time.
We hope the information in this article will make your decision easier. Buying a property is a serious challenge, as we spend up to 20 hours a day at home. Also, remember to reject emotions when buying an apartment. Spending such a large sum of money should be very thoughtful.