‘Is the Real Estate Market Going to Crash?’

Danny Yoon Real Estate Leave a Comment

Housing crashes, typically caused by a perfect storm of problems built up over time, are often unpredictable. What we know right now is that leading indicators show a strong economy and don’t support theories that the real estate market is on the precipice of a downturn. So stressing over the possibility of a crash could cause you to miss out on opportunities arising in your changing market.

Where Are We?

The market has clearly started correcting over the past few months. Interest rates have risen, reducing affordability and dampening buyer demand. However, inventory is pushing above the anemic levels that fueled price growth, and now we have a more balanced market. This is not 2008, when home prices nationwide fell by 15 percent to 20 percent, even 35 percent in some markets. Homes priced fairly or even a bit below market value sell quickly.

Historically, sellers adjust slowly to changing markets and price their homes higher with room for negotiation. Many price reductions do not indicate a market adjustment but rather overzealous sellers or inexperienced agents coming back down to true market value. So although inventory has increased, there is still probably a lack of quality and fairly priced homes.

Where Are We Heading?

I wish I had a crystal ball. But since I don’t, let’s stick to what we know and avoid speculation. At this time of year, inventory naturally declines through Dec. 31 and picks up again in spring. Since we are ending 2018 with the highest inventory in years, it’s likely that spring will see more homes on the market than in the recent past. Yes, coupled with rising interest rates, this may cause more pricing pressure. Don’t forget, though, that the economy is stronger now than it was before the Great Recession. We are seeing now that eager buyers and investors are jumping on the real estate opportunities they find.

What Should You Do?

Focus on a long-term strategy, and make decisions you can afford. Temporary market fluctuations shouldn’t matter.

Be ready for opportunity. Most people miss the gifts of changing markets. Make a plan and execute when you see the opportunity. If you buy value during the right time period and have a long-term strategy, you’ll almost never lose.

Originally appeared on magazine.realtor by Sammer Mudawar
Photo: © Brian Jackson - Fotolia.com

About the Author
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Danny Yoon

Coldwell Banker Residential Brokerage, Fort Lee

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