Key Takeaways
- About 1 in 3 Americans want the housing market to crash, according to a new survey, and many renters believe that a crash will allow them to afford a home.
- Experts warn against trying to time the housing market because lost equity, rising prices, and a dash for homes could offset any potential gains from waiting.
- Instead, the best thing to do is buy a home when you can afford it.
If you’re waiting for the housing market to crash, you’re not alone.
According to a 2024 survey by Lending Tree, over a third (36%) of Americans actively want the housing market to crash. What’s more, 29% of renters say a housing crash is the only way that they’ll finally be able to buy a home.
With home prices at historic highs, it’s no surprise that some people hope the market comes crashing down. But according to experts, waiting for lower home prices could end up costing you in the long run.
The Cost of Sitting on the Sidelines While Prices Rise
The logic of buying after a crash is that you’ll end up getting a lower price for your home. But what if that crash never comes? You’ll ultimately be stuck paying higher prices down the line.
“I’ve seen too many people lose money by sitting on their hands waiting for that crash that never comes,” said Evan Harlow, a realtor at Maui Elite Property. “Matter of fact, if you’re fence-sitting, it’s merely costing you.”
Realtor.com predicts that housing prices will increase by 3.7%, meaning a $400,000 house today could cost $414,800 in 2026.
Historically, home prices have risen about 4% year-over-year. However, recent years have supercharged this trend, with home prices doubling in value in just one decade (from 2014 to 2024)—and that’s despite massive macroeconomic shockwaves such as the COVID-19 pandemic.
4%
Home prices typically rise by about 4% each year. That means that a $500,000 house this year could cost $520,000 next year.
Additionally, for every month you pay rent instead of a mortgage, you lose out on potential home equity.
Let’s say you bought a home 20 years ago for $150,000. If your home doubled in value over the past two decades, you would still have gained $150,000 worth through appreciation alone, plus what you gained through your mortgage payments. Additionally, you only have a decade of mortgage payments left, likely totaling under $1,500 per month. That’s cheap compared to most rental markets.
“As prices and rents rise, buyers lose years of equity growth,” said Marlon Bellmas, Sales and Marketing Director at Future Generation Homes, a Miami-based real estate investment firm. “Home equity lines of credit (HELOCs) can also be leveraged for other opportunities. The long-term wealth effect is significant.”
How Rising Interest Rates Are Eating Into Your Future Buying Power
This price spike has been coupled with higher interest rates, meaning that home buyers have even lower buying power. Jules Garcia, an agent at New York-based luxury real estate agency Coldwell Banker Warburg, warns that a 1% increase in interest rates can reduce a buyer’s budget by as much as 10% in some high-cost markets.
Does that mean that you shouldn’t buy while interest rates are still high? Not exactly. Rather, experts suggest that you buy with the intention of refinancing when rates ultimately drop.
“When combined with the continued annual appreciation of homes in high-demand areas, buyers often face the harsh reality that the longer they wait, the more likely their goal gets farther away,” said Garcia. “You can’t control rates, but you can control when you buy. Secure your home now, refinance later, and skip the Black Friday scene that’s coming when rates fall,” he said. “You’ll never be able to go back in time and pay today’s price for tomorrow’s house once the market heats up again.”
The Opportunity Cost: What Your Down Payment Could Be Earning
One major argument for trying to time the market is that your down payment can earn money in the stock market while you wait for prices and/or interest rates to come down, offsetting the losses you might incur from rising home prices and lost equity. While the argument makes sense in theory, in practice, it is much harder to execute.
If you put $80,000 in a high-yield savings account, you will have more money in the bank than if you just spent it on a down payment. But there are other costs to consider—for example, are home prices rising? Will $80,000 buy the same home next year?
“In hot markets, appreciation alone can wipe out years of disciplined saving in 12 months,” said Nathan Richardson, founder of real estate investing firm CashForHome. “That down payment should be working for you in real estate equity instead of just in a bank account.”
Tip
There are many down payment assistance programs to reduce your initial lump sum payment, helping buyers invest in higher-earning markets while still building equity.
Why Timing the Market Rarely Works for Regular Homebuyers
Ultimately, experts agree that the best time to buy your home is when you can afford it. Don’t try to time the market.
“The housing market isn’t like the stock market. You can’t just click ‘buy’ when the dip hits,” said Richardson. He argues that things like finding the right home and securing financing take time.
“Expecting everyday buyers to nail [timing] perfectly is a fantasy,” he said. “For regular homebuyers, time in the market almost always beats timing the market.”
“In real estate, the best time to buy was five years ago,” Richardson said. “The second-best time is when you can afford it and it meets your needs. The market rarely waits for anyone.”
The Bottom Line
Rarely throughout history has housing been so unaffordable. For many Americans, the question of homeownership is no longer a choice: They simply cannot afford to buy a home in the current market.
But for those lucky enough to afford it, homeownership is an option that deserves careful consideration. For many cautious buyers, it may seem tempting to wait for a market crash and lower prices. However, experts warn that the longer you wait, the more you may end up paying in the long run.
