Your Home Sold Guaranteed Realty — The Nathan Clark Team

Our Realtors Can Help You Through a Housing Crash in Johnston

Concerned about the impact of a potential housing crash in Johnston, RI, on your ability to sell your home? Many home sellers are nervous about getting involved in the housing market when there’s high inflation and rising interest rates.

While there likely won’t be a housing crash in Johnston, RI, the market has certainly cooled. This has had negative effects on home sellers and buyers alike.

In this post, our real estate team at Your Home Sold Guaranteed Realty – The Nathan Clark Team will explain what causes a housing crash and whether we’re headed toward one now. Then, we’ll break down four tips that can help you sell successfully in a challenging housing market.

How Does a Housing Market Crash Begin?

So, what exactly causes a housing crash in the first place? A crash tends to follow a housing bubble that bursts after reaching unsustainable levels. 

A bubble occurs when home prices rise due to factors like high demand, low supply, low interest rates, looser lending standards, and increased investor activity. Eventually, prices reach a point where they’re unrealistic compared to the actual value of the property, causing the bubble to burst. 

This can happen in a housing market of any size, whether it’s on a local, state, or national level. However, not every bubble ends in a crash, and rising home prices don’t automatically mean the housing market is headed towards an unsustainable bubble.

How Did The Housing Market Crash Start in 2008?

Many homeowners are familiar with the housing bubble that burst in the U.S. in 2008 and the Great Recession that quickly followed.

So, what happened to cause this housing crash? Throughout the early-2000s, the housing market had been booming. But eventually, it reached a peak in 2006 and started to decline. Two years later, in December of 2008, the Case-Shiller home price index recorded the largest price drop in its history.

This led to many negative consequences for homeowners. Many found themselves unable to afford their mortgage payments or with devalued homes that were worth less than the mortgage.

As a result, the country faced a credit crisis that led to many foreclosures and sparked the recession that followed.

Will There Be a Housing Crash in Johnston, RI?

So, should we fear a repeat of 2008? It’s true that the housing market has been hot in the past few years. However, the economy has recently begun cooling down, due to rising interest rates, high inflation, and fears of a recession.

During the summer of 2022, inflation reached 9.1%, a 40-year high. At the same time, interest rates had been steadily raised in an effort to curb inflation. By late 2022, those rates had reached a little over seven percent.

These conditions have cooled the market, leading to less demand from home buyers and causing home sellers to lower their asking prices.

It Seems Unlikely

It’s impossible to guarantee anything, but it seems unlikely that we’ll see a repeat of the 2008 housing crash. However, a cooling market seems inevitable for many areas of the country. 

How bad the effects are will depend on what area you live in. But the good news is there are strategies you can use to prepare yourself. 

First, it’s important to distinguish that the booming housing market experienced by much of the nation over the past couple of years can be considered a hot market, not a housing bubble. 

Bubbles are relatively rare and are usually defined by unsustainable growth in housing prices and low mortgage rates. Hot markets, on the other hand, are much more common. They’re influenced by local market conditions and the levels of supply and demand in that particular area.

So, while it’s impossible to predict with 100% certainty, most real estate experts seem to agree that we’re not headed toward another housing crash. This is because demand is high, supply is still low, many home buyers are more creditworthy, and lenders have stricter lending requirements.

In fact, while home sales in June 2022 dropped by 5.4%, the median sales price was still up 13.4% from the same point last year.

High interest rates may lead to lower housing prices or an overall plateau in prices, but this doesn’t mean there will be a sharp crash like the one in 2008.

What Role Do iBuyers Play in the Housing Market?

Another factor to consider when considering selling a house during a housing crash is the role of iBuyers. iBuyers are companies that buy homes as-is, directly from home sellers. The seller does not need to fix the home, list and market it, or work with a real estate agent.

iBuyers use an algorithm to determine what to pay for the home. They make their profit by fixing up homes and selling them for a profit.

iBuyers are relatively new, but they have the power to influence the local market in a particular area. They sell these flipped homes for prices that ordinary home sellers struggle to compete with, which can affect overall prices in the area.

Ultimately, it’s best to get the opinion of a real estate agent about the potential effects of iBuyers on the local housing market. An agent can help you decide when and how to sell your home in a way that still gets you top dollar.

What to Know to Prepare For Selling a House During a Housing Crash

1. Price Your Home Right

It’s more important than ever to price your home accurately during a recession or even a housing crash in Johnston, RI. You’ll likely have to price it lower than you could have before interest rates became high.

Pricing the home too high will scare away buyers looking for cheaper deals to compensate for more expensive mortgage rates. However, pricing too low means you miss out on potential profits.

Working with a real estate agent with in-depth knowledge of the local area is essential in a recession. An agent has specialized knowledge of the pattern of home prices in the area and can help you walk the line in coming up with an individualized pricing strategy for your property in a way that iBuyers and other algorithmic methods can’t.

2. Make Your Home Move-In Ready

Another way to prepare for selling a house during a housing crash is to make the property move-in ready. In tough economic conditions, home buyers probably don’t have the necessary funds to renovate or repair a home. 

Investing in your home to make it ready for its next owner will help it sell much faster. This includes getting a pre-inspection, making necessary repairs, hiring a professional cleaning service, and ensuring that furniture, decor, and colors are as neutral as possible. A real estate agent can also point out other specific things home buyers in the area are looking for.

3. Get Your Timing Right

Depending on your situation, selling a house during a housing crash can be tricky. It goes without saying that it’s better to sell a home before a recession, where lower housing prices mean you may sell for less than you initially paid.

If you can afford to wait, it may be better to do so. But if you need to sell now, make sure to work with an experienced real estate agent who can help you carefully consider prices in your local area. An agent can help you decide how long to wait before housing prices in the area fall even lower.

4. Decide if You Also Need to Buy During a Housing Crash in Johnston

If you need to buy a home after selling your current one, you may not need to worry as much about timing. A home is an investment like any other– if you want the most profit, your goal should be to buy low and sell high. So if you sell your home at a lower price during a recession, this also means you’ll be able to buy one at a lower price.

And as the economy recovers and your equity grows, you’ll eventually be able to sell it at a higher price than what you originally paid.

We Can Help You Sell, If a Housing Crash in Johnston, RI, Happens

If you’re selling a house during a recession, you’ll need a local solution. At Your Home Sold Guaranteed Realty – The Nathan Clark Team, we recognize that the current economy has many home sellers worried. That’s why we’re proud to offer our services and unique guarantees. These guarantees set us apart from other real estate agents in Johnston, Rhode Island.

We have specialized knowledge of the local housing market in Johnston and surrounding communities. We’ve helped thousands of families in Rhode Island sell their homes fast and for top dollar, and we know we can do the same for you.

This isn’t just an empty promise. Thanks to our Guaranteed Sale Program, we can guarantee your home will sell for a certain price and within a certain timeframe. Otherwise, Nathan Clark will purchase it himself.

Sell a Home in a Down Market Easily with Nathan Clark

In the end, selling a house in a recession can only happen with an experienced real estate agent. Even if there is a housing crash in Johnston, RI, don’t lose hope. In-depth knowledge of the local area is key to making smart decisions about when to list and how to price your home.

At Your Home Sold Guaranteed Realty – The Nathan Clark Team, we have the experience to get your home sold successfully, despite challenging market conditions.

To learn more about our home seller guarantees or for more information on working with us, give us a call at 401-288-3557 or fill out the form below.

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