Here's a YouTube video about the changing mortgage rules in 2018 that captures in a nutshell how a lot of people seem to think about the housing market:
• Video Link
Summary:
- You will need to qualify for a mortgage 2% higher than the rate you actually get (so there's a lower risk you'll have a hard time paying if and when rates go up again).
- You can "afford" a $700,000 mortgage this year if you make $100,000 a year and can put 20% down. "Affording" $X is synonymous with somebody being willing to give you $X in credit.
- You will be able to "afford" $150,000 less next year! Look at that house shrinking! Buy now!
But is it really a good idea to borrow $550,000 on $100,000 of income? And what's going to happen to the price of that home you were going to buy for $700,000? Most other people will have to qualify for the stress test too and so fewer people will qualify for $700,000 mortgages.