It’s natural for people to be concerned that they’re buying a house when prices are at their peak, and people worry about that in almost any market. So when you start hearing news about the market shifting, and home prices coming down, you might wonder if your house is worth less than you paid for it. But don’t worry about home values to fall in 2023. The real estate market has stabilized and is not a falling/failing market.
Home values go up and down. Real estate values aren’t on a constant upward trend. They do take a dip here and there. But overall, the value of your house will appreciate over the years, despite some dips. So, unless you have to sell when prices are lower than you paid for your house, you can always just wait for the market to bounce back before selling.
The good news is that while prices have been adjusting down in some areas, they haven’t been falling drastically. In fact, home prices are only predicted to decline 4% in the coming year. Considering how much appreciation many homeowners gained in the past few years, that would mean many homes will still be worth more than when they were purchased.
So, for the most part, you don’t have to sweat the news that prices are coming down. Don’t trust things you read online, trust a real estate professional in YOUR area. Real estate is “local”. Your local agent will be able to provide you with local stats.
However, it can be an issue if you find yourself in a position where you’re unable to pay your mortgage and your value has dropped. According to this article from First Journal Tuesday, mortgage delinquencies have been on the rise recently. They increased from the recent bottom of 2.75% homeowners (at least 30 days behind) back in May 2022, up to 3% in November. That’s not a huge increase, and it’s still fairly low, but if you find yourself in that percentage of people, it can be scary and concerning.
When people find themselves behind on mortgage payments, there can be a tendency to wait until it’s too late to deal with it. Just hoping things will get better and resolve themselves is not the best approach.
Here are some things you can do if you’re having trouble making your payments:
- Call and discuss your circumstances with your lender. If it’s a temporary issue and you can reasonably expect to get caught up and continue paying in a short period of time, they may be willing to work with you. They might give you a forbearance (a temporary hold on your payments) while you get back on your feet. Or they might be willing to give you a modified payment for a period of time. But if they are unwilling to help in any way, they may at least give you time to sell your house—or approve a short sale if necessary—rather than initiate the foreclosure process.
- Consider selling your house. If you’re having trouble keeping up with payments, it may make sense to sell your house and buy a lower priced one, or rent for a while. Just because you’re unable to make your payments doesn’t mean you can’t or won’t make money on the sale of your house. Call us and let’s talk about things and get a feel for how much your house is currently worth. Despite prices coming down in some areas, you might find that there is enough equity to sell and walk away with a profit.
Whichever route you choose if you’re struggling to pay your mortgage, the key is to do it sooner rather than later. Avoid getting too far in the hole with your lender, or before prices potentially drop further than forecasted.
While there’s a lot of news about home prices falling, the forecast of a 4% drop in the next year shouldn’t be an issue for most homeowners, even if they bought in the past couple of years.