This is What You Need to Know to Prepare for a Down Market
If you need to sell a house, what should you do if there’s a housing crash in Pigeon Forge? Is that a real possibility? In this post we’ll talk about what a housing crash might look like and how you should prepare.
Just this year, lots of things have changed in the economy and the market. This summer, we saw shocking inflation rates. In fact, at 9.1%, inflation reached a 40-year-high. On top of that, rising interest rates are pushing homebuyers out of the market.
Even though it’s becoming more difficult for Americans to own a home, there are still buyers out there. You’ll still be able to sell your house for a good price if you have the right strategy. But it’s even more important than ever to make your listing stand out.
If the market continues to decline, what should you do? Will you still be able to sell your house and not lose money? This guide will help you. And working with Your Home Sold Guaranteed Realty – The Kings of Real Estate, we’ll help you build a strategy.
What is a Housing Market Crash?
Before you can create a home selling strategy, it’s important to understand the possibilities ahead. So, what is a housing crash and is that a real danger for homeowners in Tennessee?
If we are in a real estate bubble, that could be bad news. A housing bubble happens when property prices rise at a rapid pace. Often, they go above their true market value. That’s what creates the bubble. And it pops when the market eventually corrects and prices plunge.
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 Pigeon Forge?
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 Pigeon Forge. 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
You can also get ready to sell by making your house completely move-in ready. Homebuyers don’t always want a fixer-upper. Most of them want a home that’s ready to live in that doesn’t require a lot of repairs.
Now, when everyone wants to save money, buyers want to avoid budgeting for big fixes or renovations. The more you can take care of things for them, the more attractive your listing will be. A move-in ready house sells faster because buyers know their stress and costs are lower.
Think about getting a pre-inspection. Hire professionals to clean, make needed repairs, and make everything look as inviting as possible.
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 Pigeon Forge
If you need to buy a home after selling your current one, you may not need to worry as much about timing. A home is an investment like any other– if you want the most profit, your goal should be to buy low and sell high. So if you sell your home at a lower price during a recession, this also means you’ll be able to buy one at a lower price.
And as the economy recovers and your equity grows, you’ll eventually be able to sell it at a higher price than what you originally paid.
We Can Help You Sell, If a Housing Crash in Pigeon Forge 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 Pigeon Forge, Tennessee.
We have specialized knowledge of the local housing market in Pigeon Forge, 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 Pigeon Forge, 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.