Will the Real Estate Market Crash in 2023?

If you have been paying attention to the news, the feed on social media or talking with your neighbors about the housing market you’ve probably heard that the housing market is going to crash in 2023.

This has been a buzz topic for quite sometime, and today we are going to address this question in depth. Now that 2023 is here... what will really happen to the market?

"Is the market going to crash?"

"Am I going to loose my house?"

"Will my equity tank?"

"Will this be just like the crash of 2008 all over again?"

First things first, if you have been scrolling through social media feed, and have been told of the housing market is going to crash, more than likely this is a scam! Every time we see these headlines it’s unfortunately someone looking to make a quick buck...

So let's take a dive into the facts of the 2023 housing market...

Before we move forward, let's take a quick glance at the past couple of years...

Let's start with 2020...

This is when the first pandemic shut down happened. Since the pandemic caused our economy to close almost completely it resulted in heavy job loss, and layoffs for a lot of American people. We watched from home as the government assisted with handouts due to the difficult times. They gave tax breaks and bonuses.

More than ever we watched Americans fluctuate from unemployment, furlough, and other financial assistance. As 2020 closed out we watched people take the opportunity to relocate and sell their homes. The housing market began to climb and the housing competition started to brew.

Then we walked into 2021...

In 2021, we started to get a little comfortable with this new normal, but now we were expected to go back to life as it was pre-pandemic.

During this time, the housing market skyrocketed. We watched as home values rocketed to an all-time high. Mortgage rates were at an all time low, this made for a perfect time to either purchase a house with a low interest rate, or sell your house for top dollar. 

We watched as people started to shop, and shop, and the demand started to decrease.

All of 2022 was about fighting for a house...

Or if you were a seller, it was a great time...

Those who were ready to sell found themselves in a really sweet spot to sell at top dollar.

Buyers had it highly difficult because many properties that were listed had an abundance of interest fast, making it difficult to avoid either overbidding and paying more than the asking price, or they found themselves waiving inspections just to have a better chance of being selected to purchase the house. Ultimately 2022 was a busy year for the real estate market, but a market like that one cannot last forever.

It began to shift quickly and we watched an unusual jump, as interest rates went from a low 2-4% and literally doubled within a 12 month period. This has never happened in the history of real estate ever before.  Which has led to many experts stating their is going to be a crash in 2023…

But here we are, 2023 has arrived and we must expect big changes in the market… after all this pandemic based economy has to return to something more consistent, right?

Here's what the facts are pointing to for 2023...

Our housing market is going to slide back and look similar to the market of 2019, but it will not remain there... Home industry experts still point to a recession, but assure that it’s going to be short, sweet and simple. 

Looking at the data, the crash of 2008 is NOT going to repeat. Here are some factual reasons why…

1. The majority of today’s homeowners have over 50% equity in their homes vs the homeowners in 2008.

2. More than ever homeowners are actually taking other routes to avoid foreclosure.

3. Currently 6% of American borrowers are underwater on their loans.

4. Only .05% of these “underwater” properties are actually going through foreclosure.

Now more than ever, people are determined to keep their homes to avoid foreclosure. That simply points right back to the question we have been looking at…

Will 2023 lead us to a recession like the crash of 2008?

The short answer is No - we will not repeat 2008.

However, we will see a dip in the market from 2021. Prices will fluctuation and interest rates will continue to change. It is expected that not many people will be as eager to sell, and those who still want to sell have missed the chance to nab that top dollar for their home.