This is What the Market Looks Like and Where it Might Go
In the last year, have you been wondering if a housing crash in Hall could be on the horizon? You wouldn’t be alone if you did. The economy has become more and more volatile in the last few months. This is causing homeowners in Tennessee to feel anxious.
Looking at inflation, we had record high numbers this year at 9.1%. That’s the highest it’s been in 40 years. In addition, Fed hikes have pushed interest rates up and mortgages are too expensive for most homebuyers. Fewer Americans feel like they can afford a house.
And to make things worse, most people think we haven’t seen the worst yet. Some people fear we may even face a housing crisis soon. But is that true? And if it is, what can you do about it? In order to protect your assets, what should you be doing to prepare?
Anyone who lived through the 2008 financial crisis knows what the worst can look like. In this post, we’ll discuss what may happen and how you can strategize for the future.
Your Home Sold Guaranteed Realty – The Kings of Real Estate can help you create a plan.
What is a Housing Market Crash?
But first, what is the danger of a housing market? A real estate bubble happens when real estate prices rise too quickly. They often go above true market values. That causes a natural correction to eventually bring prices back down – usually hard and fast.
There are many reasons property prices go up. Just a few are:
- High demand
- Decreased supply
- Low interest rates
Sometimes, however, prices go artificially high. This can be caused by extremely low interest for borrowing. Fewer credit standards for borrowers also incentivize more people to get mortgages.
Just because prices are high doesn’t mean a crash is coming, though. Only if a bubble bursts do prices fall dramatically enough to become a housing crash. But if the bubble does pop, everyone who owes money on their mortgage feels the pain.
In addition to only severe conditions bringing a crash, housing crashes are not universal. Just because one market tanks, doesn’t mean another will. Crashes can happen in local markets, state markets, or national markets – like it did in 2008.
They may come with a recession, but it’s not always the case. Although, national housing crashes and recessions do often go hand-in-hand.
2008 Housing Bubble
One example of this happening is the decline in housing prices and the eventual burst of the housing bubble in 2008, which ultimately led to the Great Recession around that same year.
In that instance, the housing market had been booming throughout the early 2000s, with housing prices peaking in 2006 before starting to decline. In December 2008, the Case–Shiller home price index recorded the largest price drop in its history.
Many homeowners found themselves unable to pay their mortgages or with homes worth less than their mortgage altogether (also known as a negative-equity position).
This left banks and lenders on the hook for the mortgages, which led to a rise in interest rates that many homeowners couldn’t afford. The resulting credit crisis led to many foreclosures and was a spark for the recession that followed.
Are We Headed Towards a Housing Crash in Halls?
The housing market has enjoyed a period of hot activity in recent years. However, current recessionary conditions and high inflation has led to a rise in interest rates, which has many homeowners wondering whether we’re headed towards a crash.
First, it’s important to distinguish a hot market from a housing bubble. Bubbles are relatively rare and are usually defined by unsustainable growth in housing prices and low mortgage rates. Hot markets, on the other hand, are much more common. They’re influenced by local market conditions and the levels of supply and demand in that particular area.
While it’s impossible to predict with 100% certainty, most real estate experts seem to agree that we’re not headed towards another housing crash. This is because demand is high, supply is still low, many home buyers are more creditworthy, and lenders have stricter lending requirements.
In fact, while home sales in June 2022 dropped by 5.4%, the median sales price was still up 13.4% from the same point last year.
High interest rates may lead to lower housing prices or an overall plateau in prices, but this doesn’t mean there will be a sharp crash like the one in 2008.
What Role Do iBuyers Play in the Housing Market?
Another factor to consider when considering selling a house during a housing crash is the role of iBuyers. iBuyers are companies that buy homes as-is, directly from home sellers. The seller does not need to fix the home, list and market it, or work with a real estate agent.
iBuyers use an algorithm to determine what to pay for the home. They make their profit by fixing up homes and selling them for a profit.
iBuyers are relatively new, but they have the power to influence the local market in a particular area. They sell these flipped homes for prices that ordinary home sellers struggle to compete with, which can affect overall prices in the area.
Ultimately, it’s best to get the opinion of a real estate agent about the potential effects of iBuyers on the local housing market. An agent can help you decide when and how to sell your home in a way that still gets you top dollar.
What to Know to Prepare For Selling a House During a Housing Crash
Price Your Home Right
It’s more important than ever to price your home accurately during a recession or even a housing crash in Halls. You’ll likely have to price it lower than you could have before interest rates became high.
Pricing the home too high will scare away buyers looking for cheaper deals to compensate for more expensive mortgage rates. However, pricing too low means you miss out on potential profits.
Working with a real estate agent with in-depth knowledge of the local area is essential in a recession. An agent has specialized knowledge of the pattern of home prices in the area and can help you walk the line in coming up with an individualized pricing strategy for your property in a way that iBuyers and other algorithmic methods can’t.
Make Your Home Move-In Ready
Another way to prepare for selling a house during a housing crash is to make the property move-in ready. In tough economic conditions, home buyers probably don’t have the necessary funds to renovate or repair a home.
Investing in your home to make it ready for its next owner will help it sell much faster. This includes getting a pre-inspection, making necessary repairs, hiring a professional cleaning service, and ensuring that furniture, decor, and colors are as neutral as possible. A real estate agent can also point out other specific things home buyers in the area are looking for.
Get Your Timing Right
Depending on your situation, selling a house during a housing crash can be tricky. It goes without saying that it’s better to sell a home before a recession, where lower housing prices mean you may sell for less than you initially paid.
If you can afford to wait, it may be better to do so. But if you need to sell now, make sure to work with an experienced real estate agent who can help you carefully consider prices in your local area. An agent can help you decide how long to wait before housing prices in the area fall even lower.
Decide if You Also Need to Buy During a Housing Crash in Halls
If you’re in the tough position of needing to buy a new house and sell your old one at the same time, timing is everything. To make the most of any investment, the main principle is to buy low and sell high. But it’s not always possible.
The reality is that many people lose money because they bought a house in a hot market. When tides eventually turn, sometimes people are forced to sell at a loss. If you can avoid selling at a loss, do it.
On the bright side, however, if you buy during a down market, you’ll recoup profits when prices come back up. The most important thing is to understand what’s happening in the market and don’t make decisions blindly.
We Can Help You Sell, If a Housing Crash in Halls Happens
If you’re selling a house during a recession, you’ll need a local solution. At Your Home Sold Guaranteed Realty – The Kings of Real Estate Team, we recognize that the current economy has many home sellers worried. That’s why we’re proud to offer our services and unique guarantees. These guarantees set us apart from other real estate agents in Halls, Tennessee.
We have specialized knowledge of the local housing market in Halls, Chattanooga, Sevierville, and surrounding communities. We’ve helped thousands of families in Tennessee sell their homes fast and for top dollar, and we know we can do the same for you.
This isn’t just an empty promise. Thanks to our Guaranteed Sale Program, we can guarantee your home will sell for a certain price and within a certain timeframe. Otherwise, Tracy King will purchase it himself.
Sell a Home in a Down Market Easily with Tracy King
In the end, selling a house in a recession can only happen with an experienced real estate agent. Even if there is a housing crash in Halls, don’t lose hope. In-depth knowledge of the local area is key to making smart decisions about when to list and how to price your home.
At Your Home Sold Guaranteed Realty – Tracy King and The Kings of Real Estate Team, we have the experience to get your home sold successfully, despite challenging market conditions.
To learn more about our home seller guarantees, or for more information on working with us, give us a call at 865-830-3908 or fill out the form below.