Recently, there’s been a ton of talk about whether or not a housing market collapse is coming soon. While many people have their own real estate market predictions, you have to examine market data to accurately determine what may happen. If you’re not sure where the market stands or real estate predictions for the rest of the year, keep reading to learn more. In this article, we’ll go over the housing market’s current state, the possibility of a collapse, and tips for investors to protect themselves.
What is the Current State of the Housing Market?
As a result of the Covid-19 pandemic, the housing market has seen several changes over the past couple of years. At one point, home prices and mortgages were more affordable and accessible for people looking to buy a home. However, it’s extremely difficult to purchase a home at a fair market price these days.
Ultimately, it comes down to supply and demand. Right now, the United States is experiencing high demand with not enough supply to keep up. Unfortunately, this has been the case over the past few years, which is why home prices have been so high.
Additionally, another issue that’s affecting the housing market is low inventory. Inventory over the past few years has been much lower than anticipated. As such, it’s making people warier of putting their homes on the market since it’s more challenging to find one after you sell it.
Finally, inflation and increasing prices of goods and services significantly impact the housing market. With home prices skyrocketing and no sign of slowing down, it may be increasingly difficult to find an affordable home to buy in 2022. So, does that mean there will be a collapse? Let’s look at some real estate predictions and why experts think the housing market may collapse.
Do Experts Think the Housing Market May Collapse?
A housing market collapse is a major increase in home prices fueled by high demand, low inventory, inflation, and more. Unfortunately, when the market collapses, it could cause some homeowners or investors to lose value on their homes, and real estate income can diminish.
That said, does it look like a housing market collapse is on the radar for the near future? Not necessarily. Instead, many experts think the market will “reset” or “correct”, instead of collapse. A market reset is when the demand and supply level out and prices become more reasonable for investors.
Although the market may not collapse this year or even next year, many experts predict it will stay hot for a long time. However, there doesn’t seem to be one single answer or prediction. So, if you’re concerned about a collapse and want to know what you can do to protect yourself, let’s go over some tips next.
How Can Rental Investors Protect Themselves From a Collapse?
While there’s not a solid prediction on whether or not the housing market will collapse soon, it’s best to stay prepared either way. Here’s what investors can do to protect themselves from a potential housing market collapse.
Unfortunately, the current market puts rental investors in tough scenarios. For instance, with a lack of real estate available, it’s hard for investors to diversify and expand. Additionally, it can be extremely difficult to find and keep tenants at a competitive rental rate. As such, investors can protect themselves by:
- Finding Good Tenants– One of the most crucial steps in running a successful rental business is finding good tenants. After all, you want to find renters that will stay in your property long-term, pay rent on time, and take care of the property as you would.
- Keeping a Good Cash Reserve– If a market crash is on the way, you don’t want to be left with no money and no income. So, try to keep a solid cash reserve so you can potentially buy more rentals at a lower cost.
- Buying Cash Flow Properties– Aim to purchase properties that will give you positive cash flow, regardless of the changes in house value.
- Avoiding Tenant Turnovers– Tenant turnovers can leave you with extended vacancies, especially during a market crash. You can avoid tenant turnover by running a well-managed rental business and offering tenants a lease renewal.
- Hiring Property Management– A great property management team can set you apart from other rental businesses. Talk to your Northern Virginia property managers to help maximize your rental portfolio today.
Not only will these practices help investors in the case of a market collapse, but they can also help regularly. So next, let’s go over some real estate predictions for 2023.
Real Estate Market Predictions for 2023
It’s hard to say what will happen with the housing market throughout the next year and beyond. However, several experts have made real estate market predictions for 2023.
Most experts predict that it will continue to be a seller’s market for quite some time. However, with mortgage rates rising, it could make room for more real estate inventory. Although more homes may be added to the market, it won’t be a significant enough change to switch from a seller’s market to a buyer’s market.
Additionally, since there won’t be enough homes available to meet demand, home prices will inevitably continue to rise. Furthermore, mortgage rates may increase as well, making it extremely expensive and more complicated to get a house and a mortgage.
Although there won’t be massive changes within the real estate market over the next year, experts think that the home price growth in the United States will slow down in 2022 and 2023. Additionally, mortgage rates are set to increase but stay relatively low compared to past rates.
The latest trends show that prices are increasing so much throughout the United States because of the lack of supply. Although that may seem obvious, it doesn’t look like much will change over the next few years. Furthermore, one of the most widely agreed-upon predictions is that inventory will remain low, and home appreciation will be slower than it has been in the past couple of years.
Some experts predict that home prices will reach a 16-year high while rental rates will decrease. If this is the case, it could leave investors in a tough financial situation. This is one of many reasons why investors should start maximizing their businesses now. One way to do so is by hiring property management.
Maximize Your Rental Portfolio With Property Management
Being a landlord and managing several properties can quickly add up to a lot of work. With just one person in charge of marketing properties, finding tenants, performing maintenance, collecting rent, and so much more, it can get extremely overwhelming. As real estate market predictions suggest, investors should now maximize their portfolios.
Bay Property Management Group has the knowledge and expertise to help even the busiest landlords. With our comprehensive rental management services, you don’t have to feel like you’re working a full-time job as a landlord. Instead, we’ve got you covered. Contact BMG today if you need rental management services in Baltimore, Philadelphia, Northern Virginia, or Washington DC.