Housing Market – Opinions & Predictions

We just signed off and sold our house this weekend while building our forever home. The people we dealt with have had strong opinions that the housing market will hold strong, and that values will still increase into 2022. Others want to be the first to predict a “bubble” or impending “crash.” What’s your take on the housing market’s future?

I’m leaning towards the market will NOT crash, rather prices will plateau as interest rates go up. The last housing crash dealt with people who should NOT have been qualified for loans being handed money at adjustable rates. Today’s requirements are a bit tougher. This hot market seems to be more of a supply and demand situation with low interest rates. On September 1st, there were more real estate agents in the U.S. than there were homes for sale. For a balanced market, the number of homes available would have to multiply over 4x current inventories.

…time will tell

I agree, I don’t think there will be a “crash” like there was last time. There’s too many fail safes and rules about mortgages this time around.

I attempted to buy a house this past summer in the west metro. My wife and I looked at 19 houses between April and August that fit our criteria, and we bid on four of them. We did not land any of them. Three of those four offers we put in bids on were at least $20k over asking price.

From what I can tell, there is a significant number of buyers out there purchasing houses without an inspection. I refuse to do that and my realtor advised me against it too.

I’ll try again next spring. Luckily I’m in a situation where moving is not an emergency. I primarily need a bigger garage and a better school district for my son who is not even 3 yet.

Inflation has a way of making prices remain elevated

Hard to trust any government entity at this point. The Fed, CDC, housing, all a big question mark for this guy.

I don’t see interest rates moving up, we won’t be able to afford our national debt if they do.

I don’t see anything slowing down anytime soon, there’s still minimal supply and excess demand. Eventually I agree with you Bucky, it will plateau a bit but whether that’s 6 months or 3 years from now is tbd. The normal real estate metrics would indicate it will be further out, but if gas, natural gas and overall inflation keep heading the way they are it could be sooner. I’m really glad we found our forever home a year ago and have it locked in for 30 years at 3%!

gimruis wrote:

I attempted to buy a house this past summer in the west metro.

Mound is a great community with some affordable housing albeit not that much availability

For the record, we sold our house at full asking price 17 days after listing and the buyer opted not to have an inspection. Even with the house being only 12 years old, that’s probably not something I’d do. Everything is in great condition structurally and cosmetically with us being neat and not having pets, but it still seems crazy.

I have 2 coworkers who are dead set on “waiting” for the market to cool off and prices to drop. I’ve tried to explain to them that even if you have to pay $40-50k more on a home than you would have 2 years ago, you are still coming out financially ahead at 2.75% interest versus the 3.5-4% it will likely be in 24 months. Sure, maybe prices will level off or there will be less competition but only with a corresponding rise in interest rates. When you do the math, it’s often cheaper to pay inflated prices on low interest than it is to pay a slightly lower price at a percent higher.

buckybadger wrote:

I have 2 coworkers who are dead set on “waiting” for the market to cool off and prices to drop.

The only way I see prices actually dropping is with a significant recession, and if that happens buying (and selling your current home) requires a lot of stars aligning for you.

Prices are not going to drop. The best anyone who is sitting on the sidelines could hope for is that the increase in prices year on year will slow down. That’s not much consolation it still means you’re paying more each year for the same house. It just means you’re paying not as much more.

There is massive pent-up demand sitting on the sidelines. This is not people who have decided to wait for prices to decline, it’s from people who simply couldn’t find houses because of very low inventory levels of for sale units.

We are not in a bubble when it comes to housing if you remember back to the mortgage crisis and Great recession that was not a housing issue it was an issue with a largely unregulated mortgage industry ignoring both its own rules and common sense and lending money to people who could not pay. That’s not a housing issue it eas an issue with the mortgage industry itself.

Anyone sitting on the sidelines is going to be very disappointed if they pass up on a house that they really wanted. The price isn’t going to go down in the future. It’s simply not going to appreciate at the astronomical rate that it currently is appreciating.

I have been house hunting since February and this Spring was absolutely brutal. Insane offers, zero time to decide, and tons of competition. We finally found something we are really excited about and close next week, but it took some patience and walked away from one due to a bad inspection.

I have watched too many “the housing market is going to crash” videos to count. I was going to wait, but I finally decided if we find something we love we will go for it, take the 2.875% rate, and plan to stay a while. A few reasons why I think the Twin Cities market will slowly continue to rise:

– Demand still outpaces supply and prices here have a ton of room to grow when you look at other similar metro areas and consider all the employment opportunities we are offering.
– Inflation is real and we are just seeing the beginning.
– The government will do everything in its power not to let it crash. This has already been demonstrated throughout the last 2 years with housing forbearance, low rates, student loan pauses etc.
– 40 year mortgages will start to gain more traction.
– Growing number of landlords – both corporate & smaller operations are buying up housing and renting it for more than the payments.

If I am wrong, the main reasons it will correct will probably be:
– Big-time recession with lots of job loss.
– General unaffordability as prices continue to outpace wages.
– Interest rates increase rapidly to combat inflation.
– Inventory skyrockets as mortgage forbearance ends and the “I-buyers” try to unload a ton of overvalued inventory.
– General demographic trends leading to less family formation & dual income purchasing.

Just realized I wrote a novel – apologies but I have been living and researching this for the last year. I tried to bold the TL:DR version.

mnfisherman18 makes some good points. I’d add I think the market in the Twin Cities will level off a bit once businesses decide what teleworking arrangements will be. I think there will be even more people leaving the metro and moving to smaller towns but still within an OK drive in case they need to go into the office. That should increase inventory.

crappie55369 wrote:

<div class=”d4p-bbt-quote-title”>gimruis wrote:</div>
I attempted to buy a house this past summer in the west metro.

Mound is a great community with some affordable housing albeit not that much availability

Mound is a little too far west for me. I grew up in Minnetonka and I agree that Mound is a nice place to live though.

IMHO –
There is no slowdown in site. The demand is too high, people need to live somewhere.
You can only delay the inevitable so long. There will be Valleys but over all the mountain will get taller.

gimruis wrote:

I primarily need a bigger garage and a better school district for my son who is not even 3 yet.

We left Crystal for Maple Grove about 7 years ago for those reasons. Good luck. I can’t believe what houses in our neighborhood are selling for now, and how quickly they’re moving.

Ralph Wiggum wrote:

We left Crystal for Maple Grove about 7 years ago for those reasons. Good luck. I can’t believe what houses in our neighborhood are selling for now, and how quickly they’re moving.

The western portion of MG is in my search criteria. The 2 houses I bid on there this past summer were very reasonable in cost but people were bidding without any inspection contingency.

I do not agree with bidding without an inspection contingency, but in today’s market it is becoming more and more of a norm. We signed-off selling ours without an inspection contingency at full listing price this weekend. One of my coworkers did the same selling theirs just a few miles away. He had 3 offers for full asking price, one for $2k over asking price…but went with the one full asking price offer that had no inspection contingency (~30 year old home).

It’s risky, but as a seller who wants to cash-in on equity…buyers are playing to that knowing a guaranteed sale is money in-hand, versus something with more logistical hoops. No inspection is simply more attractive to most sellers in this market.

My realtor thinks it should be illegal to purchase a home without an inspection done unless its a brand new build.

gimruis wrote:

The western portion of MG is in my search criteria.

We’re near Weaver Lake–love the area.

We sold our prior house in January 2018 for $242K, the young family that bought it put some more lipstick on it, and just sold it for $325K. That’s not a bad ROI in 3-1/2 years.

HRG

gimruis wrote:

My realtor thinks it should be illegal to purchase a home without an inspection done unless its a brand new build.

The first guy that did an inspection on our house was worthless. The second guy was Ok, but made some bold & wrong conclusions regarding electrical code. And new construction can often have even more issues pop up than a house 10-12 years old.

Half of all inspections can be done on a walkthru in an open house, scams imo. Good money makers for those involved including the realtors at times. Not everyone knows what to look for tho so it is what it is.

When you have 20 offers as a seller and you simply wouldnt need to jump thru the hoops of an inspection, why would you?

Don’t get me wrong it sucks but what ya gonna do.

gimruis wrote:

My realtor thinks it should be illegal to purchase a home without an inspection done unless its a brand new build.

I’m not a huge fan of home inspectors. It just seems like a money grab. I don’t need to pay someone to show me a dent in the siding or a rock on the roof.

The major things that need to be checked should be done by trained professionals. Hvac Tech, septic/sewer tech, mold test etc.

For the small amount you pay a guy cannot inspect a house properly. Most of the major items/issues that will arise cannot be foreseen by one.

Angler II wrote:

<div class=”d4p-bbt-quote-title”>gimruis wrote:</div>
My realtor thinks it should be illegal to purchase a home without an inspection done unless its a brand new build.

I’m not a huge fan of home inspectors. It just seems like a money grab. I don’t need to pay someone to show me a dent in the siding or a rock on the roof.

The major things that need to be checked should be done by trained professionals. Hvac Tech, septic/sewer tech, mold test etc.

For the small amount you pay a guy cannot inspect a house properly. Most of the major items/issues that will arise cannot be foreseen by one.

This!

My three inspections I had done on my house purchases were pretty much worthless. Each a different inspector. They pretty much showed me cosmetic type stuff that should/could be fixed. I guess maybe the only benefit is that you may have some recourse if there is something major they checked out and totally missed.

Good advice on the home inspectors. I’ve never actually hired one since the current house (which is the only one I’ve ever owned) was brand new when I bought it. I’ll keep this in mind. My realtor has a couple that he recommends, and I trust him. I’m not qualified to do a home inspection myself.

I think there are good & bad inspectors just like any profession. Having a realtor who spent 15 years working as a contractor made is more comfortable with waiving it, but it was also a fairly new build. I would definitely require an inspection on anything over 5 years old, ours helped us walk away from a money-pit this summer.

Brought my thermal camera w me to open houses lol. Pretty cheap way to view roof and basement issues for anyone who’s looking rn.

Also takes great selfie thermal nudes one can send to the FG/FW.

gimruis wrote:

My realtor thinks it should be illegal to purchase a home without an inspection done unless its a brand new build.

Your realtor sounds like he’s in bed with the inspector. I know a few home inspectors. All of them I wouldn’t trust to make a Jude call on anything. I did my own inspection. And had a hvac buddy inspect that system.

My wife has been with C21 for over 20 years. we weathered everything in between. great years and not so great years. she feels prices will level somewhat and not rise at the meteoric rate lately. Most folks that have a mortgage now were actually qualified to borrow money based on their income. pre 2008 anybody breathing was qualifying for loans they could never pay back. i remember her showing $400 thousand plus houses to literally people that worked in fast food restaurants. more time than not they got the loan and went into foreclosure. they used those variable rate mortgages and it killed them. i took a 30 year loan in 2001. refi-ed once when it made sense. paid the mortgage off last year. great feeling as we aren’t getting any younger and who knows what will happen the rest of Biden’s term.

Bearcat89 wrote:

Your realtor sounds like he’s in bed with the inspector. I know a few home inspectors. All of them I wouldn’t trust to make a Jude call on anything. I did my own inspection. And had a hvac buddy inspect that system.

Certainly possible, but I trust my realtor so I trust his recommendations and suggestions.

I personally don’t know any home inspectors.

And I personally am not qualified to make a home inspection myself, as I previously posted.

Buying a house without an inspection is a risk I’m not willing to take.