It’s no secret that the housing market is on fire right now. Prices are soaring and there’s seemingly no end in sight. But are we in a bubble? And if so, what should you do (and not do) to protect yourself? Today, we’re going over 5 things you shouldn’t do if we’re in a housing bubble. Read on to learn more!
1. Don’t Stretch Your Finances Too Thin
If you’re thinking about buying a home, it’s important to make sure that you can afford the monthly mortgage payments. Don’t stretch your finances too thin just to get into a home that’s out of your price range. If we are in a housing bubble and prices start to drop, you don’t want to be stuck with a home that you can’t afford.
2. Don’t Buy More House Than You Need
It can be tempting to buy the biggest and best house possible when prices are high. But resist the urge! Only buy as much house as you need. Not only will this save you money, but it will also make it easier to sell your home if you need to down the line. After all, who wants to deal with the hassle of selling a huge house?
3. Don’t Put All Your Eggs in One Basket
The housing market isn’t the only place where prices are soaring. If you have money to invest, consider spreading your investments around. For example, instead of investing all your money in real estate, put some into stocks or other assets as well. That way, if the housing market does crash, you won’t be left completely penniless.
4. Don’t Borrow More Than You Can Afford
If you’re taking out a loan to buy a house, make sure that you borrow an amount that you can comfortably afford to pay back. Keep in mind that interest rates may rise in the future, which could make your monthly payments even higher. only borrow what you need and be prepared for potential rate hikes down the road.
5. Don’t Ignore warning Signs
Just because prices are currently soaring doesn’t mean that there aren’t warning signs of a potential crash ahead. Be on the lookout for things like rapid price increases, low inventory levels, and people flipping houses for quick profits. If you see any of these red flags, it’s possible that we could be headed for a housing market crash.
Only time will tell if we’re currently in a housing bubble or not. But regardless of where prices end up going, following these 5 pieces of advice will help ensure that you don’t get burned if things take a turn for the worse. So whether we’re in a bubble or not, play it safe and avoid stretching your finances too thin, buying more house than you need, putting all your eggs in one basket, borrowing more than you can afford, and ignoring warning signs!