Real Estate Market Crash 2023

Price fluctuations, interest rate hikes and inflation are dominating the U.S. house market.

Are we in a recession yet? Will home prices bounce in 2023 or continue to drop? Should we sell our homes and rent? Should buyers wait and snatch their home at a bargain?

The world is changing and we believe the time to own a home is now. There are quite a few ways to look at the housing market and in the end, it all boils down to what your needs, or wants are.

Are you looking for an investment home or a family home to raise a newborn?

Investment vs live in

An investment home can come in many shapes and sizes, most importantly it could be as a rental that you will rent to tenants, it can also be a fixer upper you'll fix and try to sell for a profit (flip) and can even be a live in home that you bought at a discount and are planning on reselling for profit.

A live in home is that which you need for you or your family, a place to come back to every day, somewhere you can enjoy time with your child and spouse, kick back and relax. Usually without worrying too much if its value is going up or down because there is no plan to sell in the near future.

Which makes more sense financially Buy or Rent?

We believe it all depends on your particular situation, without a very long questionnaire it is almost impossible to answer this accurately, but we will do our best to help guide you in the correct path.

You should rent if:

• If you move around a lot for work, definitely consider renting instead of buying.

• Those who can't or won't save for financial hardships are better off renting their home, because in the case of an unexpected breakdown, repairs can be very costly. A new roof could set you back over $50,000 depending on the type of roof, geographic location and home value.

• Rent if you don't want or can't give a pretty large down payment for a house, usually 10-20% of the home value.

• You should definitely rent if your credit isn't good or needs rebuilding, don't buy into any house just because you don't want to wait, rebuild your credit and choose wisely.

• Renting is also ideal for those who's job isn't very reliable, might be laid off, or know that they will have to change jobs eventually. Renting gives you the possibility to downsize to a more affordable home that suits your financial situation.

You should buy if:

• You have enough money saved up for down payment and a good 6 months of mortgage payment.

• Your job is stable and secured.

• You have decided to settle with your family.

• As an investment.

Are we in a recession?

Anyone would argue we are not in a recession, yet we see home prices falling back by the day, interest rates going up and there is no telling when it will all stop because it is just the beginning. In some states home prices are holding pretty good or even still going up, slightly. We believe it is all about to come to a very abrupt end, and a recession is going to take a toll on everyone buying or selling their homes. The Real Estate machine will come to a halt.

Will home prices continue to drop in 2023?

“Definitely”

It is impossible to know the future but it is not impossible to realize where the Real Estate market is heading. With a very nice tail wind, home prices soared across the country, most to an all time high. Like anything in life after a price hike comes a price drop, a consolidation period. We expect home prices to drop at least 20% of their realized value over the last 2 years.

Should we sell our home and rent until prices drop, then buy another home?

I wouldn't suggest selling your home simply because it's price went up, renting is not for everyone and you might end up stuck renting and struggling to find the perfect home in the future, besides who likes moving!

If you must sell your home and cash in on the soaring prices, we would suggest downsizing instead of renting, if renting is a must, an affordable and cheap rent is a must, remember renting at $2,000.00 per month means you will be out $24,000.00 every year until you buy your next home. Then that money will be turned to equity which some of us might see as a "savings account almost" because once we sell our home we can pull all or most of that equity back from the house, turning it in an "investment" although many people will disagree.

Should buyers wait and snatch a house at a bargain?

As mentioned above, waiting can end up costing you more. The question is: "Can you afford to wait"

We must point out that sometimes a high home price doesn't necessarily means a bad thing if interest rates are fairly low. It could be a better option buying an overpriced home with a very low interest rates rather than a cheaper home with a double digits interest rate.

It all comes down to the math between these two scenarios, which, you nor I are able to dictate. They happen on their own and we can only run the numbers and do what we believe is best for us. Don't be afraid to use online calculators and run different scenarios and numbers, using today's interest rates to get a "feel" of what you are getting into.