Media and economists will talk about real estate at a national level, but the real measure is local
Talk to any good real estate professional, particularly a local agent, if you want a pulse on how the real estate market is doing around your home. The market is not crashing. We are not seeing a repeat of the 2008-2010 recession. The recession from Dec., 2008 through 2010 was largely due to the lack of banking regulation, lending and appraisal processes and poor buyer credit. What is reminiscent of that financial failure, is the massive increase in home valuation. Home values ran up over the last two years at a pace never seen before. That is why the national headlines talk about a housing recession.
Why did the housing market get so hot?
Yes. We saw housing sales and price increases through the roof for two years. There is one simple reason. Interest rates. When the cost of money, which is the interest rate, is near-zero the result is going to be a run on the market. Cars and housing were both pummeled to a point where supply became the major problem. Not enough housing or cars available to meet a consumer’s chasing the lowest interest ever seen. Coupled with the government throwing hundreds of billions of dollars into consumers hands and you have a recipe for economic headaches yet to be felt.
So is the housing market going to crash?
A recession is almost certain in 2023. Forget how politicians are trying to get economists to redefine the term to meet political agendas. The economy is slowing down. The cost of money has gone up nearly 3% since early 2022. Employment is still solid and inflation continues to be nearly 9%. The effect on real estate, both residential and commercial lending, is being felt daily. More and more buyers are backing off. Fewer sellers are jumping to sell their home. This is not bad. In fact, it is good. We need the demand to come down to give the supply time to come up. The more balanced it becomes the more healthy the economic conditions. Housing, by itself, will not see a market crash. A recession will affect people looking to buy or sell a home, but it is not a sweeping affect.
Who cares about national real estate news?
We don’t. Nor should you. Sure, it can make for some good table talk. But housing is a local discussion. Here in Connecticut, what happens in one town is different from the town next to it. Some areas will see faster and more sharper slowdowns than others. Hell, if the town is large enough you could see differences happening at the neighborhood level. It all comes down to buyer interest, town development and available inventory. Towns with high tax rates, poor crime rates, and weak education statistics are less attractive to buyers. Houses for sale in that market will be more dramatically more impacted to a slowing real estate market versus a town with lower taxes, less crime and good schools.
Be an informed buyer
Real estate is the largest purchase most people will make. It is an investment. Over time, if you stay on top of things, it will become an asset. Work with a real estate agent who can give you sound, solid and factual advice. Avoid agents who only have opinions and general comments. No purchase is a guarantee, but every purchase is a risk if bought blindly. At GLG Homes, all we do is real estate. Buy it. Sell it. Renovate it. Rent it. Residential and commercial. Have questions? We can help. Reach out to me ([email protected] or call/text at 203-486-8868), there is never an obligation to talking with us.