Learn 4 Tips To Sell Your House in a Down Market
Concerned about a housing crash in Carmel Valley, CA? Many homeowners are worried about the effects of rising interest rates and high inflation on home prices and the future of the housing market.
In early 2023, both interest rates and inflation continued to remain high. interest rates for a 30-year fixed-rate mortgage were 6.19%, with the Federal Reserve likely to keep raising rates into the rest of the year. Meanwhile, inflation is at 6.5%, down from a 40-year high of 9.1% in the summer of 2022.
Rising interest rates and inflation have caused home prices to fall, as more buyers avoid entering the market. This has caused many people to speculate on whether we’re headed toward a market crash.
So, what should you do if you’re looking to sell a home in Carmel Valley, or other areas of California?
In this post, our team at Your Home Sold Guaranteed Realty – The Pabst Group will discuss the current state of the housing market and whether a crash is inevitable. We’ll also share four key tips to help you sell your home for top dollar despite a down market.
How Do Housing Market Crashes Happen?
If you’re selling a home in a potential housing market crash, it’s important to know what exactly a crash is and how they occur. Housing crashes are the result of housing bubbles that burst when home prices rise to unrealistic levels.
They’re accompanied by high demand, low supply, low interest rates, and relaxed lending practices.
Bubbles burst when home prices become wildly inflated and demand starts to fall. When this happens, home prices start to drop and supply rises as the market attempts to return to equilibrium.
It’s important to note that housing bubbles are not the same as hot markets. In fact, bubbles are relatively rare, and are characterized by unsustainable levels of growth, like higher than average price increases.
When the market crashes, it may coincide with other challenging economic conditions, like a recession or high inflation– but not always. This is because the economy is heavily affected by the health of the housing market and vice versa.
Housing market crashes can occur on a small scale, like a city or neighborhood, or a larger scale, like an entire state or the whole country.
The 2008 Housing Market Crash
Many homeowners are familiar with the housing market crash that occurred in 2008, which was followed by the Great Recession.
Before the crash, home prices had been booming all throughout the early 2000s. But eventually, they peaked in 2006 and began to decline until 2008, when the Case-Shiller home price index suddenly recorded the largest price drop in its history.
So, what caused the bubble to burst? Aside from unrealistic home prices, lenders were also offering lax borrowing conditions and credit standards
Once the market crashed, many homeowners found themselves unable to afford their mortgages, or with homes worth less than their mortgage altogether (also known as a negative-equity position).
As a result, banks and lenders were left on the hook to recover the money for their mortgages. The subsequent rise in interest rates and credit crisis meant many homeowners could no longer afford their properties. This led to many foreclosures and the resulting recession in the economy as a whole.
Will There Be a Housing Crash in Carmel Valley in 2023?
The housing market has seen a period of hot activity in recent years. In 2022, home prices were even 38% higher than in 2020 at the start of the COVID-19 pandemic.
But due to rising interest rates, high inflation, and fears of a recession, home prices started falling in the latter half of 2022. This has led many homeowners to wonder if we’re headed toward a crash.
Home buyers are being pushed out of the market because of high interest rates, and even those who can afford to purchase a home may put it off until there’s less economic uncertainty.
It’s impossible to predict whether a housing crash will occur for certain. However, real estate experts seem to agree that the market is undergoing a price correction.
By late 2022, home prices had dropped by 2.4% from their peak earlier in the year. Some market experts predict that prices will continue falling into 2023, potentially by as much as ten or fifteen percent by the second or third quarter of the year.
According to Goldman Sachs, average home prices will fall six percent from their peak before reaching a plateau for the rest of 2023. However, certain markets in larger cities may experience steeper drops.
Overall, 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. In addition, home buyers are more creditworthy and lenders have stricter lending requirements, which makes mortgages much more stable.
How Do iBuyers Affect The Housing Market in Carmel Valley?
During a housing crash, many home sellers may be tempted to turn to iBuyers to sell their properties.
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 realtor.
iBuyer companies use an algorithm to determine what to pay for the home. They’re usually able to give the home seller a cash offer in as little as 24 hours. From that point, the home can be officially sold in just a few days.
Then, iBuyers typically make their profit by fixing up or upgrading the homes and selling them for a larger profit.
iBuyers are relatively new, but they have the power to shape local housing markets. They sell these flipped homes for prices that ordinary home sellers struggle to compete with, which can affect overall prices in the area.
In addition, while they’re convenient, the main trade-off is that home sellers ultimately get less profit than they otherwise would have with a realtor.
Ultimately, it’s best to get a realtor’s opinion about the potential effects of iBuyers on your local housing market. An experienced professional can help you decide when and how to sell your home in a way that best meets your needs and still gets you top dollar.
4 Tips On Selling During a Housing Crash in Carmel Valley, CA
Price Competitively, Yet Reasonably
During a down market or potential housing crash in Carmel Valley, it’s more important than ever to price your home accurately.
Rising interest rates mean you’ll have to price your home lower to compensate for the increased mortgage cost. That way, you still have the best chance of attracting interested home buyers who can afford your home.
There’s a fine line between pricing your home low enough that you don’t scare away home buyers, but high enough that you don’t miss out on potential profits.
The best way to price your home in a potential housing market is by working with a realtor who has in-depth knowledge of the local area.
A realtor has specialized knowledge of the pattern of home prices in the area and can help you develop an individualized pricing strategy for your property in a way that iBuyers and other algorithmic methods can’t.
Emphasize Your Home’s Move-In Readiness
An important aspect of selling a home during a down market is making sure the property is move-in ready.
Home buyers are often willing to pay a little extra for a home if they don’t have to renovate or repair it. This is especially the case during a recession or other tough economic conditions.
You’ll be able to justify a slightly higher asking price for your home if you take care of necessary repairs and invest in some upgrades.
- Getting a pre-inspection
- Making necessary repairs
- Hiring a professional cleaning service
- Adding a new roof or floors
- Updating curb appeal
- Ensuring that furniture, decor, and colors are as neutral as possible
A realtor can also point out other specific things to make your home stand out from other properties on the market.
Sell During The Right Time
It goes without saying that selling a house during a housing crash can be challenging. For this reason, it may be better to wait if you can afford to do so.
But if you can’t avoid selling a home in Carmel Valley, make sure to choose the right time frame to sell your home. For example, homes listed in the spring or summer tend to sell faster than homes listed during the winter.
Be sure to consult with an experienced realtor to help determine when to list your home on the market. An agent can also help you decide how long to wait before housing prices in the area fall even lower.
Decide Whether You’ll Also Need To Buy
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 means you can use the profit to buy your next one. If you can afford to, buying a home with cash and avoiding lenders can be a good option to avoid high interest rates.
But if you need a mortgage, be sure to explore all your mortgage options to make sure you wind up with a good deal. Another option is to rent a property until interest rates decrease.
Sell Confidently Despite a Potential Housing Crash in Carmel Valley With Us
If you’re selling a house during a recession, you’ll need a local solution. At Your Home Sold Guaranteed Realty – The Pabst Group, 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 Carmel Valley, California.
We have specialized knowledge of the local housing market in Carmel Valley and surrounding communities. We’ve helped thousands of families in California 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, The Pabst Group will purchase it ourselves.