The reasons why the Housing Market WILL NOT crash in 2023.
A lot of analysts are predicting the 2023 housing market bubble and crash. They predict the 2023 housing market will be similar to what we saw in 2008. I see what they’re saying and why they’re saying it but frankly I think they are super wrong. I am going out on a limb to enter my own prediction that not only will the housing market not crash in 2023 but will actually go up in some markets.
In this 4-part series I’ll explain why I’m confident about this prediction and why you shouldn’t wait to buy your next home. Early 2023 is a key time to be investing in Real Estate.
What’s happening in the market:
The first elephant in the room that we must address is how real estate went from a record boom year in 2021 to the ice bath it is today in 2022. Why has the market come to a jolting stop?
Did we lose Demand?
Usually when products stop selling we look at demand and we ask the question do people not want it anymore?
- Has this happened in Real Estate? Do people not want to buy homes anymore? Is it possible that Demand for Real Estate died?
NO, the truth is that demand for real estate today is higher than it was last year. We’ve added another year worth of new home buyers to the market but most of them haven’t been able to buy. Our problem isn’t demand, it’s affordability.
- If affordability is the issue that must mean that prices are too high and values have to crash to get the market going again, right?
Nope, that’s close but not right either. A year ago, people were perfectly content having bidding wars and paying outrageous prices for new homes. They did this because interest rates were incredibly low which made payments incredibly cheap. If rates had stayed low, prices would still be running higher.
- Since today’s Mortgage Interest Rates are higher than they’ve been since the great recession that must be the reason why we’re heading for a housing crash.
Wrong again, history and human behavior give us a great view into the future of what’s coming down the road in the very near future. Looking backward we can clearly see it is far more likely that rates will give before home values do.
Now we know the problem
Now that you know Affordability is the problem and not demand. Keep reading in part two of this series to see how to understand the basic factors driving our economy and markets. In Part 3 & 4 we look at past human behavior to know what real estate will do in 2023.
President – Reverse Mortgage Specialist
Heritage Reverse Mortgage
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