Since 1965, the average home price has increased 118%, according to a new report by Clever. The median household income has increased just 15% over the same period.
Even though prices are high, some experts suggest scooping up a home now. That's because there's a good chance costs could rise even more next year: Goldman Sachs expects prices could go up another 16% by the end of 2022, according to a recent report.
"I think if you find a home you do like, you should move on it," says Daryl Fairweather, chief economist at Redfin.
You're unlikely to get a better deal on a home if you put off buying, Fairweather says: "[Prices] are not going to come back down. Overall I think home prices will continue to grow through the spring and over the next decade."
This is because the economy will likely grow next year, she says. The delta variant of Covid-19 slowed economic growth, but now it's picking back up. "I'm pretty optimistic the economy will grow next year and that will lead to higher interest rates," she says. "Even with those higher interest rates, there will be more demand for housing."
Job seekers have more negotiating power as companies are sweetening their salary and benefits offers to entice Americans to come back to work. "This means more money in peoples' pockets and more demand for housing," she says.
Even now "there are signs of the housing market looking stronger than we thought it did," she says. "Homes are selling quicker than expected, which is a sign that the housing market and economy are going to rebound."
Not all experts share this opinion, though. Some believe it would be smarter to keep renting for now. "If you don't have to buy, then wait," Ivy Zelman, CEO of housing research firm Zelman & Associates, recently told Grow. "I would definitely says it's a seller's market." In September, home sales were up 8% over last year, according to the National Association of Realtors.
One reason to wait: Buyers may soon no longer be at a disadvantage, Zelman said. Developers in some states are building more and more homes, she said, and eventually there are likely to be more homes than buyers.
"I would say over the next 12 to 18 months, we are going to start to see the market starting to show more moderation and more cooling, and you will be more likely to be in a more balanced buyer's market," she said.
Plus, the median sale price of existing homes is $352,800, 13.3% higher than it was last year, according to the NAR. Some properties are going for above the appraised value, Zelman said. This might lead you to overpay for a home. "Because it's such a strong market, you have to be really careful," she said. "I would not be buying a home above appraised value."
Paying over the appraised value for a house can be bad for your pocketbook, and it can be a bad long-term investment, too. Usually, a home's value increases between 3.5% and 3.8% per year — in 2021, though, it's the highest it's been since 2006.
"Home price appreciation is not sustainable at these levels," she said.
More from Grow:
- A millennial quit his job to travel the U.S. in a tiny mobile home: How he made the money work
- It's a great time to make big money selling a house — but it could also mean a big tax bill
- Nearly half of Americans selling their homes don't plan to buy another: Here's why