Learn 4 Tips To Sell Your House in a Down Market
Worried about a housing crash in Fallbrook, CA? Many Fallbrook, CA homeowners are worried about the impact of high interest rates and inflation on home prices and the real estate market.
At the start of 2023, both interest rates and inflation remained high. For a 30-year fixed-rate mortgage, interest rates were at 6.19% and are expected to continue rising. Meanwhile, inflation is still at a high of 6.5%, although this is a decrease from the record high of 9.1% in the summer of the previous year.
These economic conditions have led to a decrease in home prices as fewer buyers enter the market, causing some to speculate on a potential market crash in the near future.
In this post, Your Home Sold Guaranteed Realty – The Pabst Group will discuss the current state of the housing market and address the question of whether we’re headed toward a crash. Additionally, we’ll provide four key tips to assist you in selling your home for top dollar, even in a downward market.
Understanding Housing Market Crashes
Housing market crashes are an understandable cause for concern for many homeowners, especially prospective sellers. Understanding what causes them is key to weathering any potential decline in the market, because you’ll be able to make the most informed decisions possible.
Market crashes happen when housing bubbles burst after home prices in the area reach unsustainable levels. Prices are driven up to these inflated levels from a combination of high demand, low supply, low interest rates, and relaxed lending practices.
Eventually, the bubble bursts when demand starts to fall. This in turn causes home prices to drop sharply as the market seeks to correct itself and return to an equilibrium.
Keep in mind that housing bubbles are not the same as hot markets. Housing bubbles are actually pretty rare. They only occur when there’s unsustainable levels of growth, like prices that rise substantially higher than their historical patterns.
It’s also important to note that the health of the housing market and the general economy are closely tied together. For this reason, the timing of a housing market crash can sometimes align with broader economic challenges, like a recession or high inflation, but not always.
Housing market crashes can also happen on a small or large scale, affecting a specific neighborhood or city, or an entire state or country.
How Did The Housing Market Crash Happen in 2008?
The 2008 housing market crash, followed by the Great Recession, is a familiar tale for many homeowners. But what exactly caused the market to crash?
During the early 2000s, home prices had been soaring until they ended up hitting their peak in 2006. From that point on, prices started to drop, and in 2008, the Case-Shiller home price index recorded the biggest drop in its history.
The cause of the crash was a combination of factors, including unrealistic home prices, lax lending conditions, and lower credit standards.
After the market crashed, many homeowners were unable to afford their mortgages. Others realized that their homes were now worth less than their mortgages (also known as a negative-equity position).
This meant banks and lenders were left with the task of recovering the money. The rise in interest rates and the credit crisis that followed resulted in many foreclosures and a recession that affected the economy as a whole.
Will Fallbrook, CA, Experience a Housing Market Crash in 2023?
The real estate market has experienced a surge in activity in the past several years.
For example, in 2022 home prices reached a high of 38% compared to pre-pandemic levels in 2020.
However, as interest rates climbed, inflation rose, and concerns about a recession grew, the housing market began to slow down in the latter half of 2022.
This shift has caused many property owners to question if a housing market crash is on the horizon for 2023.
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.
The Effects of iBuyers On The Real Estate Market in Fallbrook, CA
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.
Sell a Home Fast Despite a Housing Crash in Fallbrook, CA, With These 4 Tips
Develop a Pricing Strategy
During a down market or potential housing crash in Fallbrook, 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.
Focus On Making Your Home Move-In Ready
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.
Time The Market
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 Fallbrook, 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.
Figure Out Whether You’re Buying or Renting Next
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.
Navigate a Potential Housing Crash in Fallbrook, CA, With Our Realtors
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 Fallbrook, California.
We have specialized knowledge of the local housing market in Fallbrook 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.