There are signs of a recession. We have high costs for goods, interest rates have skyrocketed with no signs of stopping and the housing market has shown a slow in sales. Therefore it’s a recession, right? Well, not so fast. If there’s one thing I’ve learned in my six years as an Exclusive Buyer Agent, it’s that you cannot predict what the housing market will do. The pandemic demonstrated that when all analysts predicted a crash, the housing market took off faster than anyone has seen in decades.
Watch Fourth Quarter Sales & Interest Rates
Since about 2014, the market has been on its way up. It stayed steady up until about 2020 when COVID-19 hit. Then it took a few month hiatus and made up for lost time and then some. Finally, almost a decade later, we are starting to see the growth slow. Prices are leveling out and homebuyers are thinning out and being pickier about how much they pay for a house. This is not even close to demonstrating a recession, but only time will tell.
In the spring, many news articles and analysts were carefully dabbing their foot in the projected possibility of a recession. One thing I took note of in the spring was that these experts kept saying we need to watch the fourth quarter as that will be the deciding factor. I still hold to that prediction. Fourth-quarter sales and stats will give us a good idea of what to look out for in the coming year, whether it be a recession or otherwise.
The 2008 recession is still fresh in the government’s mind, and in my opinion, they’re going to be more careful not to allow such a severe recession to happen again. My thought is the first signs of a housing recession will have the federal banks immediately cutting back interest rates. So watch the rates. That will be a sign things are heading down, but if they do it at the right time, it could be enough to level the playing field and prevent the market from dropping into a recession.
Will the Housing Prices Ebb in 2023?!
Keep in mind, housing prices currently are still at record highs. Valuations are through the roof. The market ebbs and flows all the time. The difference here is that the market has been flowing and it is way overdue for an ebb. The ebb needs to happen and it will. The big question is, is it going to follow the natural “flow” of things and ebb hard as it has flowed for the past decade? No one can predict that and it remains to be seen.
Will this ebb happen next year? I don’t know. It seems more likely than ever that it will, but once again, it’s all going to depend on a number of factors including interest rates, inventory, cost of goods and supplies, etc. Too many factors to make a solid prediction, but I would say watch the market come March of next year and pay attention to where things are in the fourth quarter.
How to Prepare for a Recession
For homebuyers looking to buy who aren’t sure whether they should buy now or wait, here is my suggestion. Connect with a good Exclusive Buyer Agent (EBA) and have this conversation with them. It never hurts to look and an EBA isn’t going to pressure you into buying. Talk to your agent about the different types of loans you can have. They likely have some trusted lenders in their back pocket they’d be happy to connect you with so you can ask more specific questions about what options you have.
There are some loans that you could refinance down the line that offer lower rates now. There are more affordable housing options now as well, with some houses that are perfectly fine sitting on the market. Especially after the market we just had, these houses tend to get lost in the shuffle as new listings always pop up first and usually get sent out or noticed. Many times they’re overpriced to start, then they drop the price, and miss the opportunity as a new listing. Those houses are great opportunities to negotiate further and a good EBA will know how to do that for you.
So yes, anytime is a good time to buy… IF you have a good agent on your side.
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Nicholas Martin is broker/owner of Buyer’s Choice Realty in Wenham, Massachusetts. He has worked under Ronald Huth, founder of Buyer’s Choice Realty who has more than 40 years of experience in the Real Estate industry. Feel free to reach out to Nicholas Martin; [email protected] or 978-468-2138.