It actually seemed like a great time to buy early in Covid if you were ok being a landlord. Mortgage rates were so low that on a long term hold you didn’t need any appreciation to make the #s work. Uncle Sam was allowing forbearance. I admittedly didn’t understand this at the time as I was hyper-focused on stocks and distressed debt.
No one “knows” but if you understand the relationship between price, rates and rents and have a long term view you can bet with the odds in your favor, sometimes highly in your favor. Right now prices are flattish or declining in many (not all!) markets and mortgage rates are significantly higher than cap rates + some reasonable appreciation assumption in many (but not all!) markets so buyer beware. You can compound ~7%+/yr now in fairly safe bonds and bank loans with a downpayment which makes waiting way more compelling than any time in the last decade.
Real estate is very local. Here in Boise it didn't seem like a great time to buy. Before the pandemic the RE market was exceptionally competitive, with houses selling in 2-3 days with multiple over-asking offers. Not my idea of a good time to purchase. And then it got much worse during the pandemic, with people waving inspections with way over asking all-cash offers for pretty much every home -- complete bananas.
A lot of people here looking to buy have been eagerly hoping for a crash. I get it, they're priced out and want an opportunity to get in. But hope isn't a strategy. While prices have dropped a bit, it's been very modest, and not what it may seem from the headlines. The mix of homes sold has skewed less expensive, which has pulled down the median. Which means homes in pricier neighborhoods haven't really declined as much as many assume. People are still moving here, yet builders can't build fast enough due to labor shortages and supply chain issues. Very few people are leaving, and existing homeowners are locked into sub 3% rates.
What has changed is there's more inventory to choose from. Nowhere near oversupply, but more like a healthy balance. This means people can take their time, do their due diligence. And they can be pickier. I know quite a few young families with kids taking this opportunity to find a decent home in a quiet low traffic walkable neighborhood near schools they like. They're finding homes that have everything they want, at a price they can easily afford, and they plan to be there for a long time, so it just makes sense. Could they save some money by waiting 3 years? Honestly, I don't know. Sure it's possible. But it's also possible that inflation continues to moderate, the economy makes a soft landing, Putin "accidentally" falls out a window essentially ending the war, and then we're looking at lower rates (though not as low as during the pandemic) with a strong job market and increasing home prices.
Is it worth putting off the home one can purchase now that checks all the boxes to maybe save some money but risk being in a much less then ideal housing situation if things don't decline? That's a tough decision, and probably comes down to a much of personal factors, including location.
