Real Estate Fact Or Fiction

If you’ve been keeping a finger on the pulse of the real estate market in 2022, you’ve probably heard no shortage of hoopla about where the market is headed. Bonus points if you’ve also seen the panicked, apocalyptic way some people have chosen to convey said hoopla. 

True, the real estate market is shifting, but non-professionals within the space are likely to only give you a piece of the full picture. That’s where I come in! I live and work in real estate all day, every day, and I have long-lasting and trusted relationships with many other industry professionals within the market who keep me informed to the best of their knowledge. With all that info at my disposal, it’s a lot easier to debunk some of the clickable headlines you might be seeing around the web right about now and help you to figure out what this changing market really means for you and your family. 

Let’s go through three common housing market myths you might be hearing right about now, and then take a peek behind the proverbial curtain to see what’s really going on. 

Are Home Prices Falling? 

One of the number one things I get asked by clients, and even just by casual viewers of my YouTube channel, is whether or not home prices are or are about to fall. There are a few different reasons why people think this, but very rarely are they getting a complete look at the big picture. 

On one hand, some folks are seeing listings creep down in price and assume it must have a broader impact on the market overall. In these cases, I urge you to take a look at which listings are lowering their prices. How long have they been on the market? How did their original listing price compare to comparable homes in and around the same neighborhood? 

While the market is slowing down and we’re seeing homes stay on the market just a little longer than in the past, most of those homes that are actually lowering their prices are homes that were overpriced from the day they went on the market. When you see those numbers go down, it’s not a reflection of the market: it’s usually a reflection of buyers (and agents) who are realizing the feeding frenzy wherein people would gladly pay over market value for a home…is no longer a viable way to sell their home. 

On the other hand, some people are expecting home prices to fall because they see that the market is slowing down and assume that this means a necessary drop in prices. However, that’s not exactly the case! 

What we’re seeing in the housing market right now is a deceleration. Home prices aren’t falling–in fact, they’re still appreciating–but at a slower rate. Why? Because interest rates have spiked, and inventory has gone up. High interest rates serve as a barrier to entry for a lot of families who may otherwise jump on the opportunity to move, which means less demand. Add in the increase in inventory–boosting supply–and it’s no wonder homes are sitting on the market for a little longer. However, even with high interest rates and high levels of inventory, home prices themselves are still, albeit more slowly, appreciating over time. 

Is The Housing Market In A Correction? 

What the heck is a market correction, anyway? Well, here’s a definition via Forbes:

“A correction is a sustained decline in the value of a market index or the price of an individual asset. A correction is generally agreed to be a 10% to 20% drop in value from a recent peak.” 

From the outside looking in, this seems like a pretty solid possibility for what we’ve seen in the market…but it’s yet another myth. As mentioned above, home prices are still going up, and analysts have projected that will continue, just at a decelerated rate. 

If prices aren’t falling, we aren’t seeing a correction. At best, we’re just seeing a moderation as the market cools off from an unprecedented, incredibly hot market over the last two years.

Is The Housing Market Going To Crash? 

I know, this is a scary one! The internet loves to drum up fear of a housing market crash, because at the end of the day, they’re interested in giving you the information you’re most likely to click on…not necessarily the information that has the most evidence behind it. 

It’s totally understandable that a lot of homeowners and prospective home buyers would be worried that the housing market is a bubble ready to burst, just like back in 2008. Especially considering the fear many of those headlines have been drumming up, it’s a reasonable fear to have! However, there are other factors that led to that last housing collapse that are not present right now in 2022. 

The biggest difference between then and now are lending standards. Back in the years leading up to the 2008 recession, it was a lot easier to get a mortgage. Nowadays, lending standards are significantly tighter, and folks who got a mortgage in the last decade are much more qualified overall than they were in 2005-2008. 

Because we’ve already corrected the failures of the past that led to the credit collapse, the likelihood of us seeing another crash anywhere near the same scale is highly unlikely. If you want to see the numbers for yourself, this article by Lead Analyst Logan Mohtashami at Housing Wire is full of useful graphs and other data to help assuage your fears. 

Here’s The Truth

It’s always important to stay abreast of the market, especially when you’re actively looking to buy or sell your home. But now more than ever, it’s important to ensure that you’re getting your information from expert sources who have a vested interest in making sure you get correct information, not just the information that’s most likely to get you to engage with it. 

If you are in the process of buying or selling a home, let’s connect! I’m proud to be an advocate for all of my clients in all steps of the process, including debunking any worrying myths you might be hearing online. If you want to get in touch, shoot me a text to my cell at 407-848-8042 to get started!