Published November 21, 2023

When is the Smartest Time to Enter the Housing Market?

Written by Travis Recer

When is the Smartest Time to Enter the Housing Market? header image.

Did you realize that the average price of a home in the US in 1960 was just $11,900? We have experienced an average price increase of over 3,400% since then through mid-year 2023. At the time of this writing, Q3 in 2023, the average price of an existing home in the US is over $410,000.

Selling a home to buy another or buying that first home is a significant decision, often touted as a cornerstone of the American dream. However, the landscape of real estate is constantly evolving, and the adage "time is money" rings particularly true in this arena. Waiting to purchase a home can pose several risks, especially when considering the historical trends of home values in the USA over the past 60+ years.

One of the most pressing risks of delaying a home purchase is the relentless rise in home prices. Over the past six decades, the trajectory of home values in the United States has been predominantly upward. This upward trend has been influenced by various factors, including inflation, population growth, housing demand exceeding supply, and the cyclical nature of the real estate market.

According to data from the Case-Shiller Home Price Index and multiple other price-tracking data services, there has been a consistent and substantial increase in home values decade over decade in the US. Over time, this upward trajectory has been well over an 800% increase and persisted, albeit with fluctuations and occasional market corrections.

Several reasons contribute to this persistent increase in home values:

Inflation: As the purchasing power of money decreases over time due to inflation, the cost of goods and services, including housing, tends to rise.
Population Growth and Urbanization: The increasing population leads to higher demand for housing, especially in urban areas, driving up prices due to limited supply.
Low Mortgage Rate Periods: Historically low mortgage rates can stimulate demand, increasing competition among buyers and driving prices higher.
Limited Housing Inventory: In many areas, there's a shortage of available housing, intensifying competition among buyers and pushing prices up.

Waiting to purchase a home in the hope that prices might decrease or stabilize can be a gamble. While there might be short-term fluctuations or occasional market corrections, the long-term trend has been a consistent rise in home values. Therefore, delaying a purchase could mean paying more for the same property in the future.

Moreover, while waiting, prospective buyers also miss out on the benefits of homeownership, such as building equity, stability, an potential tax advantages. Renting during this time means not investing in an asset that historically appreciates in value.

However, it's important to note that every market is different, and local factors can significantly impact home values. Consulting with a real estate professional and considering personal financial circumstances is crucial when making such a significant investment decision.

In conclusion, the historical trend of rising home values in the US underscores the risk of waiting to buy a home. While short-term market fluctuations occur, the overall trajectory has been upward. Therefore, if you have been thinking about making a move or investing in the real estate market, you may want to consider acting sooner rather than later to avoid paying a much higher price down the road.