June 27, 2022
The value of the nation's housing markets has been overpriced in many markets for the past couple of years, with the danger of price drops on the horizon. Many buyers are feeling this pressure as they search for their first home as well as investors looking for their first deal or adding to their portfolio. How do you stay safe in a market with a looming cloud of price drops overhead?
Across 392 housing markets CoreLogic, presented by Fortune, has analyzed the likelihood of these markets seeing a price decline over the next year. Using various factors such as income growth projections, debt-to-income ratios, mortgage rates, etc. they have determined an increased number of markets with a 50% chance of prices declining over those 12 months, this has increased by 73% over the last month.
Similarly, CoreLogic provided analysis across the country indicating overvalued markets based on similar inputs as the previous chart. If you are a buyer in this market for single-family and especially multi-family properties, over the past couple of years many of the purchase prices have not made sense based on cash flow. Even with rising rental markets, these numbers weren't adding up. From my perspective, this will cause a slowdown in the market, but the overall feeling in the local market is that many properties are overvalued, this data from CoreLogic matches this sentiment. For a more in-depth analysis please visit Fortune Article.
So how do you stay low-risk in a high-risk market? There are a few factors to keep in mind as you are buying:
During risky market climates, the name of the game is to make sure you will keep all of your investments and assets without losing your shirt.
The housing market is uncertain for many right now. It's hard to know what the future holds, especially when it feels like prices could drop at any moment. Follow these tips and do your due diligence.
Receive updates on new posts, news, and market information with the newsletter below!