Waiting for the housing market to burst? You’re not alone: three out of four buyers and sellers believe a housing bubble exists. It’s easy to see similarities between today’s housing market and the 2006 market right before it crashed, but the two are very different. Before the Great Recession, the housing market was rampant with predatory lending practices–like balloon payments– and overly lax lending. This allowed people to over-extend themselves financially, and many bought properties they weren’t even living in. When the recession hit, the over-extended couldn’t make their mortgage payments, and the market crashed.
On the other hand, today’s housing market is an entirely different situation. National housing supplies are at historic lows, yet demand for homes continues to rise. As more people work remotely, the need for home office space grows. Also, millennials have aged into the prime home-buying age, placing more strain on an already tight housing market. Even if a recession hits, it’s unlikely banks are left with properties they can’t sell.
So, will the housing market burst? Economists are doubtful, and most expect the market to stay strong for at least the next five years. With more stringent lending practices and 30-year fixed-rate mortgages the norm for the past decade, borrowers are less likely to default on their loans.
Don’t let the idea of rising interest rates and a tight housing market scare you off. With patience and compromise, you can find the perfect home for you. Here are some tips for finding the right home in the NJ housing market:
- Consider all housing options. Condos and townhomes are great options if you don’t need lots of space.
- Expand your search. If you work remotely, look at homes outside of popular metropolitan areas.
- Research new construction. Look into new housing developments. You may have to wait longer to move into your new home, but there’ll likely be less competition.
- Don’t give up. Houses are put up on the market all the time. The perfect home for you could go up on the market tomorrow.
- Work with an experienced realtor. Find a realtor who is knowledgeable about the area you want to move to and has access to a vast professional network.