I’ve been hearing that the housing market is slowing down and prices may even start falling. Should I put my home search on hold to get a better deal down the road?

The news has been filled with stories about how the housing market is finally cooling—after more than two years of unprecedented price growth and wild bidding wars. More homes are going up for sale in many markets. Buyers no longer need to waive every contingency imaginable—and promise to name their first born after the seller—to snag a home of their own.

Some prospective buyers are starting to believe that falling prices might even be on the horizon if they just wait out this crazy market.

Is putting the home search on hold a money-saving move or just wishful thinking? That remains to be seen. No one wants to buy at the top of the market, but it’s not clear yet whether the market has peaked—or if record-high home prices and fast-rising mortgage interest rates will continue ratcheting up even further.

Now, as the nation appears to be on the precipice of what could be another recession, inflation is soaring, and financial markets are stuck in a mostly downward-moving roller-coaster ride, it seems like something has to give.

So is the time right to dive into homebuying, while you still can? Or should you go into a holding pattern? As it turns out, there are compelling arguments on each side.

Why first-time homebuyers might want to pause their search

Let’s break it down into what we know: There are more homes going up for sale. Sellers have raced to plant “For Sale” signs in their front yards while they can still fetch a good price and builders have put up more new residences. That’s great news for homebuyers.

The number of sellers forced to cut prices on their properties doubled in June compared with the same month a year ago.

We also know that there’s less competition from buyers. Fewer buyers are able to qualify for mortgages as a result of the higher interest rates. Others worried about high prices and the prospect of another recession are dropping out of the market. That means fewer bidding wars. Buyers don’t have to offer so much over the asking price—and might even be able to get a home for less than the asking price. And they don’t need to waive as many contingencies.

Still, many real estate experts are advising buyers—especially first-timers—to wait it out this period. Why? Because the toxic combo of high prices and rates has pushed homeownership out of financial reach for many younger or less well-off buyers, or would require them to dangerously stretch their budgets.

It’s likely that those who wait until the fall or next spring are likely to encounter even more homes for sale, additional price cuts, and an increasingly buyer-friendly market.

We also know that mortgage rates typically fall during recessions. So if a downturn does materialize, buyers who remain employed will likely get a little bit of a financial break.

Economists don’t expect widespread unemployment in a downturn that would lead to large numbers of homeowners not being able to pay their mortgages—as happened in the housing crash. Lenders haven’t made nearly as many risky loans. And there are still too many folks who want to become homeowners and not enough residences to go around.

So while prices might go flat, or even dip a little in certain parts of the country where they shot up the most, they’re not expected to fall significantly.

Why first-time homebuyers might not want to wait

While it’s true that what goes up must come down—there’s no telling just when that will be. It’s not easy to time the market.

Some real estate experts are predicting that home prices will just continue to rise. We know there are still far more investors and people out there who would like to become homeowners than there are properties available for them. That’s expected to keep prices high.

Mortgage rates are another unknown. Mounting recession fears could keep them in check. However, the U.S. Federal Reserve is likely to give its own interest rates another steep hike this month to rein in inflation, which stubbornly refuses to fall. When the Fed’s rates rise, mortgage rates typically follow suit.

Higher rates would make homeownership even more expensive than it is today. That could price many aspiring homeowners, especially those who don’t have the proceeds from the sale of a previous home to help finance the next purchase, right out of the market. Or first-time and other buyers might have to look at cheaper homes, such as fixer-uppers and smaller properties without all of the features they had hoped for in less desirable locations.

What’s a first-time homebuyer to do?

Most so-called experts will admit they don’t have the best track record of predicting what the economy or housing market will do. Few economists anticipated that home prices would surge more than 40% in just over two years during a global pandemic. Even fewer called the housing bubble of the mid-2000s that plunged the nation into a painful recession.

My best advice is to be vigilant about what’s happening in the housing market, as well as the broader economy. Look for clues on where it all might be heading. And don’t be afraid to negotiate with home sellers as well as mortgage lenders.

If rates fall one day, be ready to pounce immediately. Shop around for the best rates, consider paying points, which lower rates, and be prepared to haggle. You want to lock in the lowest rate you can find, yet maintain some flexibility so that if they fall even further, your lender will honor the lower rate.

The same goes for homebuying—be ready to move in on a good opportunity. Sellers are likely to be receiving fewer offers than they were just a few months ago. That means buyers might not have to offer as much over the asking price. They might not need to waive home inspections and might be able to negotiate repairs and other problems with the sellers. This can help to lower their total bills or even result in a smaller sale price. Buyers who hold on to their appraisal contingency also can save themselves some cash if the home isn’t valued as much as their initial offer. This gives them the opportunity to renegotiate a better price.

Buyers might also not need to put as much down for sellers to seriously consider their bids. This allows them to do the math and see if it makes more financial sense for them to put in a lower down payment and use the rest of the money to buy down their mortgage rates.

Watch the markets. Keep track of housing trends and economic factors. You’ll get a clearer idea of when the time is right for you.

 

For this and related articles, visit Realtor.com

OK, let’s get this straight: Craftsman isn’t just the brand name of the tools out in the garage, and Cape Cod isn’t just a fabulous vacation spot. We understand your confusion and feel your pain. There’s so much architecture lingo and name-dropping in listings, how’s a layman supposed to know what’s what? Oh look, realtor.com® to the rescue! Again! In the first of our Learning the Lingo series, we’ve compiled a guide to the most popular architecture styles to help you identify what you want in your house hunt.

Cape Cod

OK, it’s no spoiler that these homes are named after the quintessential New England vacation destination—Cape Cod in Massachusetts—where they first became prevalent. Much like the Puritans of old, Cape Cods are modest and economical. This makes sense, since Colonial settlers in the Northeast modeled their newly built homes after British cottages. These homes have steep roofs that reach the first floor (to quickly shed rain and snow) and second-story dormers (a window that projects vertically from a sloping roof). Fun fact: Original Capes used unfinished cedar shingles, which are ideal to weather the stormy and unforgiving East Coast winters.

Colonial

A Colonial is an OCD fever dream come true: It’s symmetrical and features an entry door in the middle of the front of the home with two windows on either side; there are five windows on the second floor, with one directly above the entry door. Colonials, which originally rose in popularity in the oh-so-uniform 1700s, are still common around the U.S. They’re usually built of wood or brick, which are perfectly suited to the simple, clean, and boxy style. If you see a hint of ancient Greece and Rome in the style, you aren’t wrong. Looking for distinctive flourishes? Keep looking.

Victorian

Did you spend hours with your dollhouse as a kid? Were your parents, teachers, and various health care providers worried? Then the detail-packed Victorian style will probably look familiar. Key features include a complicated, asymmetrical shape with wings and bays in various directions; elaborate trim; shingles or patterned masonry; steep rooflines; and a large, wraparound porch. They are often painted in bright, complementary colors to highlight the painstaking details. Some people are put off by their aggressive whimsy, but plenty consider them perfect houses to grow old in and sip lemonade on the porch.

Tudor

Love yourself some neutrals or Jonathan Rhys Meyers? Then you’re probably drawn to Tudors, which are built of brick or stone on the first level and complementary stucco and timbering on the second—all of which is inspired by the medieval architecture of Tudor England in the early 16th century. These babies are made to withstand the elements, with deeply pitched roofs and detailed, covered entryways, which is why you’ll see more of them in the chilly northeast.

Ranch

Blame (or credit, depending on how you feel about this style) the rise of the automobile, not cowboys, for ranch houses. Cars made it possible for families to buy large lots of land outside traditional metropolitan centers—aka “the suburbs”—so people built spread-out ranch houses to take advantage of these new spaces. These homes are one story and often have an L- or U-shaped floor plan surrounding a patio, sliding glass doors, and a carport or garage. Quite possibly the best-known symbol of American housing, the ranch can conjure up images both good and evil, but no doubt you will see lots of them.

Bungalow

These adorable one-story homes are characterized by their low pitched roof and large front porch. Also called Craftsmans, they rose in popularity in the early 1900s during the arts and crafts period and were revered for their—you guessed it—handcrafted details: hand-cut wood, iron and copper work, and masonry. Bungalows hit their peak during this time and became so popular in the early part of the past century, that you could order a complete kit from Sears.

Spanish

You find a lot of these homes in the South or Southwest (Hollywood is full of them). One reason for their popularity: They’re built from the ground up to take the heat. Clay tile roofs keep the home cool during the hot summer months and extend beyond the walls to provide extra shade, while extensive outdoor living areas, columns, and arched windows and openings take advantage of the breeze.

Mid-Century Modern

If you squint just enough, Mid-Century Modern homes (sometimes just called “modern,” though the century in question is the 20th) can look a bit like your grade-schooler’s art project. Full of sharp angles and void of ornamentation, these contemporary homes offer flat or shallow-pitched roofs and loads of glass. They often incorporate the surrounding outdoor space via decks and balconies. While they started sprouting up in the 1950s, the timeless aesthetic has turned these sleek, stripped-down houses into classics.

French Country

Is that a Nicholas Sparks movie we feel coming on? No, it’s just the French Country style that’s inspired by the rustic manors that dotted the fields of northern and southern France during the reign of Louis XIV in the mid-1600s. The Revival style popped up in the 1920s and 1960s. The homes have a square, symmetrical shape with windows (often double windows and/or balconies) balanced on either side of the entrance and a steep hipped roof. They are most often made of stone, stucco, and brick.

 

For this and related articles, visit Realtor.com