Why the Real Estate Market Crash of 2023 Is Inevitable, and When You Should Start Looking for a New Place to Live

Introduction

If you're a millennial, you might have been lucky enough to buy your first home in a market that's still booming. But many of us aren't so fortunate: Some buyers bought at the peak of the market and could be looking at years of upcoming declining property values — some may even face foreclosure. Here's why I think the real estate market crash of 2023 is inevitable and when you should start looking for a new place to live if you're already underwater on your mortgage or simply want more flexibility when it comes to selling your home.

The real estate market is heating up again.

The real estate market is heating up again anytime soon.

In the past few years, home prices have been rising across the country—and not just in a few places like Orlando, Florida, or Texas. Prices are up in most major cities (and metros and markets) across America. That's why it's no surprise that so many people want to buy a new home: they don't want to miss out on what looks like another housing boom!

But how do you know if now is really the best time for you to buy?

Interest rates are going to go up.

Indeed, interest rates in 2021 and 2022 were at an all-time historic low, and that's amazing for buyers. But experts told us it would only be a matter of time before they start to rise, which is bad news for anyone who owns an adjustable-rate mortgage.

When interest rates increase, it becomes harder for homeowners to get approved for new mortgages; lenders will have less incentive to make loans because they're going to be more expensive. If you already have a home loan and want to refinance (or if you buy another house), higher interest rates mean your monthly payment will go up—a lot—and could make refinancing difficult or impossible. Plus, if the economy starts growing again and people start buying houses again in large numbers, those low rates won't last forever!

So what should you do? First: look into getting pre-approved before looking at any specific houses; this way, you'll know exactly how much money you can spend without having any surprises later on down the line when closing costs come in higher than expected after getting approved (because they always do). Second: keep an eye on where things stand with interest rate changes over time so that when they inevitably continue to climb beyond 2022 and into 2023 (assuming nothing drastic happens beforehand), then hopefully by then, we'll know enough about how high those rates are likely going up by so we can plan accordingly based on data collected from previous years.

Inflation is inevitable.

Inflation, in the context of real estate and finance, is the rate at which your money loses value. Inflation is caused by increases in demand for goods or services; if there are more people buying things than people are making them, prices will increase until supply meets demand.

This can happen because of an increase in the money supply (more dollars floating around) or because of an increase in the price of goods and services (gas goes up). Inflation has been used throughout history as a way to control inflation rates by increasing interest rates on loans - but how does that relate to this situation?

Wages won't keep up with inflation.

If you're not familiar with the term, inflation is when prices go up.

It's already at a 20-year high, and according to the Federal Reserve, it's going to get worse in the next few years.

That means that before long, inflation will be higher than wages—and that makes it harder for people to earn enough money to buy a home.

Real estate has already hit unsustainable price levels.

You've seen the headlines: "Real Estate Prices at an All-Time High." You read them, and you don't even blink. That's because real estate has already hit unsustainable price levels. In fact, average home prices have risen above the rate of inflation, wage growth, and household income since 2015—and they're still rising. While this is great news for sellers and investors who own property—or want to buy it now because they believe it will be worth more in a few years than it is today—it's bad news for buyers who are competing against people with deep pockets so that they can afford their monthly payments on a single-family home or condo unit.

Home builders can't keep up with demand.

Remember how you read in the news that there are more people moving to Florida than ever before? Well, it's not just because Florida has a great economy.

The truth is, most people who want to move out of their homes have no choice but to stay put. That's because there aren't enough homes being built for everyone who wants one—and it's about to get worse.

Currently, home builders are struggling just to keep up with the demand for new housing; they're simply unable to build more houses quickly enough as the population grows. Why? Because they don't have access to land or skilled labor. Land availability and labor shortages are both at an all-time low right now—and if we don't fix this problem soon, even more people will be forced into overcrowded apartments or homelessness when their leases come up for renewal in 2023!

The world economy is at risk of collapse.

The world economy is at risk of collapse. The world economy has been growing for the past decade, but it's not sustainable. If there is a large enough shock to the system—like an economic downturn—it could trigger a global recession that would affect everyone and everything, including your home values.

The reason this is happening now is because of China. Chinese exports have fallen off considerably over the past few years due to the trade war with America and other countries around the globe (including Canada). As a result, China's GDP growth rate has slowed down from 10% per year to just 4%. But it doesn't stop there: after all, most countries in Asia depend on China for their own exports as well! So when China slows down its economy even more than expected (i.e., even faster than anyone predicted), then everyone else does too (i.e., even faster than anyone predicted). And once we reach that point where everyone starts panicking about money... well... let's just say we've been here before!

We're seeing more and more millennial first-time buyers in the real estate market, adding to the existing demand for more inventory.

There’s no doubt that the number of millennial home buyers is increasing, but what does this mean for the real estate market in general?

The short answer: we need more inventory.

A shortage of inventory is not just bad news for first-time buyers or renters looking to upgrade their living situation; it’s bad news for everyone. It means less choice and competition, which translates into higher prices for all types of homes. If there aren’t enough properties available on the market to meet demand, then you may find yourself paying more than what you should be paying when it comes time to sell your own home.

History tells us that we're due for another real estate crash, and how far we've come from last time suggests that we may be in for a bigger fall than ever before.

The last real estate crash happened in 2008, and it was a doozy. The crash was caused by the same thing that causes all market crashes: an imbalance between supply and demand. This time around, however, there's more money on the table than ever before—and everyone's looking for their piece of it, pushing prices up even further.

If history tells us anything about this kind of situation, it's that we're due for another real estate crash—one that could be bigger than any other before it. But what exactly is going to cause this crash? And when should you start looking at properties so you can get out ahead of the game? These are both great questions to ask, and Token Realty is prepared to help.

You should prepare for the housing market crash of 2023 as soon as possible before it's too late!

You should prepare for the housing market crash of 2023 as soon as possible before it's too late!

If you're one of those people who thinks this time is different or that the real estate market has never had a correction before, then I have some bad news. The housing market always goes through corrections, and we're right on schedule for another one in 2023. So if you haven't already begun looking into options like buying a smaller home, or listing a new property, now is the time to start!

If you still own your home, start putting money away in an account that will cover your mortgage payment plus at least three to six months' worth of utilities. If you're renting and have no plans to buy anytime soon (or ever), set up automatic withdrawals from your checking account each month so that part of each paycheck goes straight into savings instead of spending it all on rent. That way, when the inevitable happens next year, housing prices will drop across America by 50% or more again, as they did after 2008's crash (and again, most certainly into 2023).

Real estate market cycles are way more predictable than you think.

The US real estate market is in a bubble. And while most people don't like to think of their home as a "bubble," it is, in fact, just that: an inflated asset whose value won't last forever and that will eventually burst.

But here's the thing: real estate bubbles are actually way more predictable than you think. In fact, there's even a pattern to them—one that goes boom, bust, and back again every few decades or so (though it can take some time for things to get going). So if you want to get ahead of the curve when it comes to your home buying or selling plans—and make sure your investments stay on track—you need only look at history for guidance.

Mortgage refinancing drops to a 22-year low as interest rates surge even higher

If you're trying to refinance your mortgage, it's not looking good.

Interest rates are going up again. After dropping during the Great Recession in 2009 and staying low for several years afterward, they've been creeping back up since 2017—and they're expected to keep climbing through 2023. This is due to inflation as well as economic growth (which means more people paying off their loans).

If you're considering refinancing before the end of the year—when interest rates may see even more rate hikes into 2023—you should know that there's a limited window of opportunity right now.

If history is any indicator, the real estate crash of 2023 is inevitable.

If history is any indicator, the real estate market crash of 2023 is inevitable.

Real estate markets in the United States are cyclical. They go up and down like regular business cycles but with more volatility and larger swings. These fluctuations happen about every eight to ten years: In 2018, for example, we saw an upswing in prices; then, in 2022, we saw a major decline as investors lost confidence in what was then considered an overheated market (or perhaps more accurately: overhyped). The next downturn is expected around 2023—and it looks like it could be big enough that your current home may not be worth what you paid for it just two years earlier.

As real estate prices plummet, here's how to make the most of it.

As real estate prices plummet, here's how to make the most of it:

• Buy a house and rent it out. This is an obvious choice for those who have been thinking about becoming landlords. It's relatively easy to do (you can find a property manager online), and your tenants will help pay off your mortgage.

• Buy a house, rent it out and live in it. This is one way to protect yourself from the housing market crash while still getting benefits from owning property—the rental income covers some of the expenses and adds value over time as you pay down the mortgage balance or build equity in your home by making improvements on it before turning around and selling/renting once again at higher price point after the 2020's recover from recession-induced downturns in real estate prices resulting into depressed market conditions (although probably not until late 2022 and into 2023) which leads many homeowners struggling with underwater mortgages because lenders won't refinance until they get back more money than they gave out originally during boom times between 2009 & 2013 when everyone wanted to buy home! Remember that?

There's a hidden pattern to real estate that a lot of people don't know about.

The real estate market is cyclical, and there's a distinct pattern to it. The housing market can be predicted in a way that's similar to how economists predict the stock market or any other asset: through cycles of growth and decline.

The most recent crash occurred in 2008 when prices fell by around 60%. This was followed by what we call an "echo bubble," where prices rose again before crashing again during the 2022 recession. We may be about to enter another echo bubble period—a time when properties are overvalued compared with their actual worth; but this time around, we could see something more extreme than ever before because of the widespread effects of climate change on our cities' infrastructure and population density.

Conclusion

The real estate market crash of 2023 is inevitable. If a home is worth buying, it’s likely to be in a great location and reasonably priced. However, many buyers might wait too long before they start looking for their next place to live.

Take action: Buy now or risk losing out on your dream home; be sure to talk to your favorite Token Realty agent today to see how we can help you better prepare for the real estate crash of 2023.