Rebecca Richardson - Mortgage Consultant
All aboard! Riding the Real Estate Roller Coaster
There has been constant speculation that there could be a real estate market crash looming. While today’s market is different than it was in 2008, the concern is real for many buyers and sellers. There is little doubt that the market has shifted from just a year ago.
But what does this all mean if you are looking to buy now? To find that answer, look a little closer at some of the key numbers – inventory and rate of the sales price increasing or decreasing.
If the market crashes, how does that impact you?
A housing crash is classified as a sudden drop in home prices by more than 20%.
Right now, home values are holding steady and are UP 18% over where they were this time last year. While that is a long way off from a 20% drop, we don’t know what the future holds.
The best thing you can do to prepare is lock in your housing expenses for as long as you can. That may mean a longer lease or maybe buying now with a fixed interest rate.
Even if the unlikely happens and the market crashes, or inflation continues, this helps protect you by stabilizing your housing costs.
Crash or Correction? That is the Question. Home sales are down, inventory is rising and so are rates. It’s easy to understand why you might worry that this is 2008 all over again and the market will crash.
Do you think the housing market will crash? What if it just corrects?
And more importantly, do you know the difference?
While a housing market crash is when home prices quickly decline by more than 20%, a more gradual decline in home values by more than 10% is considered a correction.
Since 2019 the median home price has gone from $322,000 to $440,000. That is more than a 25% increase. The polar opposite of a crash. Talk about market mania!
But if for some reason home values suddenly are lower than they were just 3 years ago, we’d be considered in a housing crash. That’s a big IF because historically homes get more expensive over time.
Knowing the difference does that affect your thoughts on if it’s a good time to buy?
Is it easier to buy today vs. just 6 months ago?
A correction or a crash could keep you from buying now but is sitting on the sidelines really right for you? Well, none of us can predict the future. But looking at the past is a great way to better understand what could happen in the short term, like the next 6 to 12 months.
While there’s a lot of mixed data making it hard to predict what will happen, there’s a silver lining to a market cool down.
Last year, buyers had to put in an average of five offers until they were able to get a home. Even then they may have had to pay thousands of dollars over what it was listed for.
Fast forward to today, and while I don’t have all the answers on what will happen, I do know it’s easier to buy now than it was six months ago.
So, whether you think a crash is coming, a correction or things will just keep going the way they are for a while, the first step in any housing search is to speak with a mortgage professional. My team and I are always ready to assist you in your home buying needs.