Real Estate Housing Market Slowing Down in 2022
As a real estate wholesaler, I have no choice but to pay very close attention to the market. Everyday, I’m negotiating with sellers with and marketing deals to cash buyer investors. When there is a blip on the radar, I feel it immediately. There is no question things are slowing down. While I don’t have a crystal ball, I do have housing market predictions for next 5 years.
Are We Entering a Recession?
Many economist believe there will be a recession. In fact, some say we are already in the beginning stages of a recession. One telltale sign is the Fed continuing to raise interest rates to curb inflation. Raising interest rates makes it more expensive to borrow money and will cause things to slow down.
The stock market and cryptocurrencies have plummeted. The value of my 401k (which is a combination of stocks and S&P 500) has dropped 30%. My brother convinced me to buy bitcoin in December 2021 when it was $47,000 per bitcoin. I thought I got a pretty good deal. In June 2022, it’s now worth $20,000.
Home values have been steadily rising since the last crash in 2008. The most growth has been within the past few years. COVID hit in 2020 and we saw very little inventory ever since. This also contributed to the making it a seller’s market. Houses were barely lasting 24 hours on the market. Bidding wars were taking place left and right. Buyer’s were getting outbid by cash rich investors. This past year has been the wild west no doubt!
Wholesaling Business in a Hot Market
When the housing market peaked in the Spring of 2022, my wholesaling business was on fire. We were doing 8-10 deals a month, averaging nearly $10,000 in assignment fees per deal. When June hit, something happened. I felt it immediately. I still had deals under contract, but suddenly my buyers stopped buying. It literally happened overnight.
The good news is, if you are a real estate investor you can make money in any market. You just have to be aware of the market conditions. As a house flipper or wholesaler, it’s simply a numbers game. You buy it’s imperative for me to know exactly what the housing market is doing.
Real Estate Housing Market Predictions for Next 5 Years
Without further ado, here are my housing market predictions for next 5 years.
Home Prices Will Drop. This may not come as much surprise as we have already seen values come to a screeching halt. After record highs in the spring of 2022, values and leveled off and I fully expect to see a decline over the next year. I don’t expect the decline to be significant, but somewhere in the neighborhood of 10-20%.
Foreclosures Will Be on The Rise. The Fed bailed us out with economic stimulus during COVID, but that only delayed the foreclosure process. The reality is, homeowners are still feeling the impact of what COVID did. I expect to see a rise in foreclosures over the next 5 years.
Investors and House Flippers Will Be Active. The United States has 60+ million homes built before 1990. Homes depreciate, and eventually every single one of these homes will need some TLC. The house flipping industry is here to stay and we will continue to see an influx of investors join the party.
High Interest Rates Will Cripple First Time Home Buyers. It’s hard enough saving money to buy your first home. Now the Fed has risen interest rates at a historic pace so far this year, 2.67% since the beginning of the year. This won’t help home buyers who are already on a tight budget. The increase in rates will slow the market down and home prices will drop.
So there you have it. These are my housing market predictions for next 5 years. If you are a real estate agent, investor or transactor, I’m sure you are feeling the shift. The shift from a seller’s market to a buyer’s market. It will take some time before it sinks in to sellers. When it does, be ready to get some great deals!
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