The Housing Cycle: How it Affects Homebuying

You keep hearing that now is the best time to buy a home, and most people assume that is because the price of homes is the lowest it’s been in over a decade. That part is true, but there’s much more to the buyer’s market we’re in right now. For example, the housing cycle; housing cycles are not all created equally. However, there is a way to predict the long term patterns of these cycles. How does it work?

The housing cycle doesn’t necessarily have a “start” or “stop” point, but it is fair to say that a housing cycle “starts” when economic activity heats up and interest rates rise. As most buyers know, high interest rates make housing less affordable. So, as the interest rates rise, the demand for housing decreases and home prices fall. This is part of what occurred in the housing crash of 2008. As economic activity slows down, and interest rates begin to decline, housing becomes more affordable again. This is where we are now, and that is why we are now in a buyer’s market.

But like all cycles, the housing cycle repeats itself. Even in today’s market, the demand for housing will eventually go up, and prices will increasingly crawl back up as well. That is how the cycle repeats, and starts back up again. When this occurs, it will then become a seller’s market. Those who didn’t buy during the buyer’s market will then be back in the predicament that many found themselves in a few years ago: buying a house they cannot afford. Don’t let this happen to you! Instead, call Keystone Custom Homes today to inquire about affordable Pennsylvania new homes that are ideal for today’s homebuyer. We can be reached at (877)-513-0385.