If you’re thinking of selling your current home to buy your dream home, you may wonder if 2023 is the right year. What happens if you buy your new home right before we go into a recession?
There has been a lot of discussion about a possible recession in 2023. Greg McBride, Chief Financial Analyst at Bankrate tells us that “two-in-three economists are forecasting a recession in 2023.” In a recent interview, President Biden said that he doesn’t believe a recession is on the horizon for 2023 or 2024.
This is obviously a complex issue, and it’s not necessary to understand every detail of what might happen to the housing market in a possible recession. To get a general idea and answer the question of whether your dream house would lose value, let’s look at both history and expert opinions.
Historically, real estate maintains value during recessions.
History shows us that a recession doesn’t necessarily mean falling real estate values. Take a look at the graph below, which shows that home prices actually appreciated over the course of four of the last six recessions.
Current market conditions make it unlikely that home prices will fall significantly.
It’s hard to predict what will happen in any given situation, but we can see some very clear differences between our market now and the market during recessions where real estate prices dropped.
We can look at the 2008 recession for an example. There are key differences between the 2008 real estate market and our real estate market today, including improved underwriting standards, high amounts of equity, and fewer risky loans. Our market is not poised for a crash like 2008.
Experts think that home prices will vary by market, but on average 2023 forecasts call for prices to remain stable nationwide, not fall drastically. Lawrence Yun, chief economist at NAR tells us that “after a big boom over the past two years, there will essentially be no change nationally” for home prices in 2023.
If you’re thinking of buying, now is a good time.
With home values predicted to stay quite stable, don’t let fears of a recession stop you from getting your dream home. Even if we do have a recession, your home value will likely hold well, especially over the long term.
Additionally, mortgage rates are already going down, and a recession would mean mortgage rates falling farther:
Fortune explains further: “Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.” A recession could be a great opportunity to refinance your home if you purchase now while rates are still a bit high.
When making decisions about buying and selling, don’t let a possible recession worry you, especially with the market conditions we have now. If we do have a recession, it should be mild and short. In most recessions, home values have appreciated and mortgage rates have gone down. Our 2023 outlook shows stability on the horizon!
Work with MarketPro:
Make a strong offer on your new home by not wasting money on repairs of your current home. We’ll give you a fast cash offer for your current home just as it is now; no repairs, no upgrades, no inspection, no commissions or fees. You can even choose your exact closing date to coordinate perfectly with the purchase of your new home. Our team will walk you through your quote, including a review of what your home would likely bring on the open market.
If you’re in Washington, D.C., Maryland, Virginia, Pennsylvania, or Tampa Florida, we’d love to show you how easy and stress-free the sales process can be. Contact us today for a same-day, no-pressure quote.