We are seeing multiple offers back in the market place in the beginning of 2023 when we’re supposed to be in this huge real estate crash. Our clients are writing offers on properties where they are competing against multiple offers, based on our on-the-ground experience. We aren’t just seeing one and two offers , but we have seen 7 to 9 offers on some properties. Per usual, we are here to share our experience versus the headlines you are seeing in the news and give advice based on the data we are seeing in our market.
Has the market crashed, or will it continue to depreciate? Is it a good time to buy? Should I wait to buy the bottom or get in on buying the dip? These are questions we are hearing.
The philosophy of ‘buy the dip‘, not the bottom, is relevant in the current market. It is hard to TIME the market, but you can use data to help predict what is going to happen. If you followed the 2022 data, you know that we had appreciation in the beginning of the year, but we started to see depreciation in mid-2022, followed by a pretty flat market at the end of the year. Since the beginning of 2022, many buyers have been waiting for the housing prices to drop and continue to wait for them to hit rock bottom, but the issue with that plan is you are not going to know when rock bottom is until prices start going back up. Many people are waiting for the bottom, but we recommend not risking waiting for the absolute rock bottom – we could be there now, we don’t know – but rather buying the dip when prices are still lower than last year.
What will happen if the market crashes and we hit rock bottom? From June to December of last year, prices dropped by 20% from the PEAK of appreciation. Does that mean the market crashed already? OR will the market crash again?
We have already seen rates improve in the beginning of 2023 which allows us to think there is little pointing towards another 20% decline, but we also can see where the concern is coming from with the overall uncertainty of the economy and unemployment. We cannot see the future, but we can deduce from data and what has happened in the past.
One data metric we like to follow is if investors are going in and buying property. On November 18th, we sent out a newsletter on JP Morgan Chase buying a billion dollars’ worth of real estate. We’ve also seen another hedge fund pledge about $50 billion in real estate. Our team is talking to a ton of investors looking to get out in the market right now, write offers, and buy property. Investors do not seem to think that the market is going to have a major crash.
Another great metric to follow is economic predictions. Ivy Zelman, who is a real estate economist, is projecting prices to drop this year. Ivy Zelman knows what she’s talking about, and she predicts slightly lower prices in 2023, while everyone else we’ve looked at — the National Association of Realtors, Fannie Mae, Freddie Mac, all the banks, and many of the major real estate economists — predict a relatively flat, possibly slight increase.
So here’s the question: when rates come down even more, what happens to the market? We think there will be a slew of buyers back on the market, increasing demand and competition.
We got a little off topic, but let’s get back to multiple offers. Yes, we are currently seeing multiple offers on properties, but do not fear multiple offers. We are not seeing offers over $100,000 or crazy terms. If there is multiple offers, our clients are losing to competitors who are offering cash or a few thousand over, not tens of thousands.
Here’s your takeaway: regardless of what you think is going on in the market, keep an eye on it, don’t try to buy at the bottom, but buy the dip, and do what you think is best for you and your family, not what the media tells you to do.