As the housing market continues to be a hot topic, many people are wondering whether we are headed towards a housing crash. If you go to Google and type in “when is the…,” the search engine will likely suggest “when is the next housing crash?” as the top search term. While many are concerned about the current state of the market, experts do not expect a housing crash in 2023.
It’s important to understand that a recession is not the same as a market crash. While the 2008 recession was a real estate crash in a real estate recession that brought about a whole financial crisis, the current market conditions are different. The primary issue is affordability. Many potential buyers are not willing to pay more on their mortgage payments.
If you’re a potential homebuyer, it’s crucial to understand that the mortgage payment and down payment determine your affordability, and the purchase price is almost irrelevant. Most people are not buying houses in cash; they are getting a loan. Therefore, the housing price will dictate the payment, and housing prices will depend on what interest rates do. If interest rates go up, prices might reduce because buyers won’t be willing to pay extra money.
However, if you’re a smart buyer, you can take advantage of different rebates and options on the loan side. You can also negotiate with your agent and keep a pulse on what’s going on in the market. There are different loan programs available, and adjustable rate mortgages are back. But your agent has to know what they’re doing, both on the selling and buying sides.
Sellers need to pay attention to what’s going on in the market and understand that they might experience volatility depending on the particular buyer who’s writing an offer. Sellers should also know it’s no longer enough to put your property on the market with iPhone pictures, no open houses, or an out-of-area agent. If you’re a seller, you need to be proactive and know the market trends.
Overall, unless interest rates go up dramatically, we are not likely to see a significant drop in housing prices. It’s probably going to depend on what happens in the overall economy, but nobody is really pointing towards a housing market crash. While prices might fluctuate a little bit, affordability is the critical point. Buyers are no longer willing to pay a higher premium for properties.
In conclusion, the housing market is in a different place than it was in 2008, and we are not headed towards a housing crash. Investors understand that real estate is on sale and know that over the next 5 to 10 years, values are going to go up. Real estate offers cash flow, tax benefits, and other advantages that other investments don’t have. While it’s important to make sure the timing makes sense for you, buying a home is still a good investment in the long term.