Where is the Housing Crash?

Filed under: Real Estate

There are so many people predicting what to expect in the real estate market for 2023. Of course, we are seeing these conversations, because it happens annually around this time of year. It’s interesting to see the varying opinions – people are all over the board about what is going on.

The obvious question that keeps popping up: Is there a crash coming? What is going to happen in the real estate industry.

20 Years of Real Estate Data

I’ve brought this chart up a few times in my video, and I want to revisit it again. The numbers show 20 years of data, with the red line representing a flat 4.5% growth (a sustainable market) and the blue line shows what actually happened.

You can see that we got back to the 4.5% line last month. When we blew through it on the upside, I said that the further away from the red line we get, the bigger the drop we would see as the market balanced out. 2006 – 2008 is a great example of what I am talking about.

There aren’t any good comparisons to our current market, so it’s hard to say what will happen. The main thing that is different right now vs. 2008 is that the level of inventory available right now is a little on the light side. So, the low inventory is keeping a bit of buoyancy in these prices.

As you can see on the chart, we had about an 8% drop from the highest point to today’s market. Remember that the high point was a weird time though because buyers were offering over the asking price.

There’s no question that prices are down from the high point. It’s important to note that the year-over-year numbers are still up.

Millennials are Ready to Buy

Based on all the things that I am listening to, I think that we will see rates continuing to fall… which will bring a lot of people back into the market. We have the largest glut of buyers that are ready to come into the market right now. The median age of millennials is 34 years old, which is a prime time to buy a home. It is the largest chunk of people coming into the market.

As you can see, demographics come into play. People still see that buying a home makes sense financially.

Will the Real Estate Bubble Pop?

Is there a big bubble that will pop? My opinion (based on the opinions of people who are much smarter than me), is that we aren’t going to see a bubble burst. We might see 10 – 12% off of the high. But the more the rates come down, the less likely the home prices will drop.

If you are ready to buy a home, then I’m always here to help. I still believe that right now is a great time to buy. It will be the worst of times for the real estate industry, and it is also creating a window of opportunity to buy. You currently have the option to negotiate, but it will get more competitive as rates continue dropping in the future.

Of course, we can’t predict the future. This is just my opinion, we will see how it turns out! If you have questions or need mortgage assistance, contact Bill Provost at Franklin Loan Center, ‭(425) 241-1922‬.