Will 2021 likely face a housing market crash? Home sellers and buyers can breathe a sigh of relief as a majority of the experts think this is unlikely to happen.
“People are saying we’re in a housing bubble, but I don’t think the term housing bubble is the right description,” said Tabitha Mazzara, director of operations at mortgage lender MBanc.
“A bubble is something that’s going to pop. I look at it as a phase. The market is cyclical, and there may be some slight correction, but it won’t be nearly as bad as what we saw in 2008.
What’s different today from what we saw in 2008 is that people who are qualifying for loans are qualified. They are creditworthy. We’re in the situation we are now because of simple supply and demand.”
This is supported by Erik Wright of New Horizon Homebuyers. “I think the factors influencing our current market are much different than in 2008,” he said.
“I am expecting the market to begin to cool off but for it to be more of a plateau than a crash. However, I am always looking for how I can be prepared just in case something drastic happens and we do experience a real estate crash.”
Then, what should you do if you have plans to explore the housing market? Listen to what these experts have to say:
“Trying to prepare for a possible real estate crash, is sort of like trying to prepare for a possible house fire,” said Clay Risher, investment professional and column writer for Nareit, a trade publication for commercial, residential and mortgage-backed real estate investment trusts. “All you can do is mitigate risk as much as possible and hope for the best.”
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For Homeowners Who are Not Looking to Sell
If you are not planning to sell your house, you might consider refinancing your home to save money over the life of your mortgage loan. Here’s what industry experts say.
“If you already own a home and aren’t planning to sell, you should still refinance now for incredibly low rates, allowing you to sit tight and weather any storm that hits the market,” said Dawn Pfaff, president of My State MLS, a nationwide MLS, and referral network.
Peter Murray, the owner of Murray Steel Buildings, a residential and commercial construction company, supports Pfaff’s opinion.
“Even if you’ve purchased your home in the past few years, you should spend some time looking at refinance mortgage rates.
The past 12 months have brought out mortgage financing rates that are lower than they have ever been.
Depending on your financial standing, you might be able to refinance at a rate around 2.5%-3.5%, which could save you tens of thousands of dollars if not more within a 30-year mortgage.
It doesn’t hurt to shop around on refinancing quotes — I’d recommend looking at at least three different providers and comparing rates,” he explained.
For Homeowners who are Looking to Sell their Houses
You may be looking at selling your home because the current market value is high? Here’s what experts have to say.
“If you’re considering selling within the next few years, now is the time; the market is hot, interest rates are low, and you’ll get the best offer for your home,” Pfaff said.
However, Omer Reiner, a licensed realtor, and president of Florida Cash HomeBuyers, LLC, reminds sellers that, “If you are a property owner who is considering selling their property to take advantage of the high sale prices, remember that selling high also goes along with buying high,” Reiner said.
“It is best to secure your next living situation before putting your house on the market to avoid being stuck.”
One way to sell your home without having to buy another property immediately is to rent until the market begins to settle down.
At the same time, seek advice from a financial advisor and tax professional to learn about the best way to handle the profits you get from the sale of your home.
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For Prospective Homebuyers
For those looking to buy a house, Murray recommends avoiding overpaying as much as possible. Consider the price and the property before deciding to overpay.
“It goes without saying that the housing market is extremely competitive currently, with many homes for sale receiving 10-25 cash offers,” Murray explains. “This generally means that you’ll be overpaying to stay competitive.
If you’re looking at the house of your dreams, then it might be worth overpaying to get your offer accepted, but if this isn’t you forever home, by overpaying you’ll immediately be in the hole in terms of equity once the market eventually evens out.”
Eric Jeanette owner of Dream Home Financing and FHA Lenders has a similar opinion:
“If you are a home buyer, then consider waiting before you purchase,” Jeanette said. “Rent for a year and watch the market if you are concerned about buying a home only to watch its value fall during a market correction.
However, if you are buying a home that you plan to live in for the next 20+ years, then today’s purchase price really should not be a concern. Just buy the home you prefer to live in today.”
Overbuying poses a high risk, and to avoid this, calculate a strict homebuying budget before you go home shopping and stick to it to avoid overextending your finances, advises Pfaff.
Although you might not get to buy your home today, you can always consider other options like refinancing, renting, or staying in your current home until the market stabilizes.