Learn How to Sell Despite a Housing Crash in North Providence, RI
Are you worried about a the possibility of housing crash in North Providence, RI? Rising inflation, high interest rates, and tough economic conditions make sellers and buyers nervous about entering the housing market.
While there likely won’t be a housing crash in North Providence, RI, the market has certainly cooled. This has had several negative effects on home sellers.
In this post, our real estate team at Your Home Sold Guaranteed Realty – The Nathan Clark Team will cover what causes a crash. We’ll see if one could be coming and four ways you can sell your home successfully despite a tough market.
What Causes a Housing Market Crash?
It goes without saying that a housing crash isn’t good news for home sellers and buyers alike. But what exactly is a housing crash, and what causes one?
A housing bubble almost always comes before a housing crash. A bubble happens when home prices rise drastically. This may occur due to several factors, including high demand, low supply, low interest rates, looser lending standards, and increased investor activity.
Eventually, these prices may reach an unsustainable level that’s wildly above the actual value of the properties. This is the point where the bubble bursts and the market crashes.
However, it’s important to note that not every bubble ends in a crash. In addition, rising home prices don’t necessarily indicate market unsustainability. In addition, keep in mind that housing crashes can occur on a local, state, or national level.
Housing crashes may also correlate with other economic conditions, such as recessions, but this isn’t always the case.
What Happened in the 2008 Housing Crash?
One of the most well-known examples of a housing crash is when the housing bubble burst in 2008 on a nationwide scale. Since the housing market is closely tied to the overall health of the economy, this led to the Great Recession around that same time.
So, what led to the incident in 2008? Throughout the 2000s, the housing market had been booming before it eventually peaked in 2006. After that, it began to decline until in December 2008, the Case-Shiller home price index recorded the largest price drop in its history.
Many homeowners found themselves unable to pay their mortgages or with homes worth less than their mortgage altogether (also known as a negative-equity position).
This left banks and lenders on the hook for the mortgages, which led to a rise in interest rates that many homeowners couldn’t afford. The resulting credit crisis led to many foreclosures and was a spark for the recession that followed.
Are We Headed Toward a Housing Crash in North Providence, RI?
The housing market has enjoyed a period of hot activity in recent years. However, current recessionary conditions and high inflation have led to a rise in interest rates, which has many homeowners wondering whether we’re headed toward a crash.
In fact, 9.1% CPI over the summer of 2022 created a 40-year inflation high. On top of that, interest rates were a little over seven percent by late 2022.
This has resulted in home buyers being pushed out of the market, thus reducing demand. So, what’s the best course of action if you’re a home seller? What can you do to sell your house during a market downturn or housing crash?
Hopefully, we won’t experience a complete housing crash in the near future. But a softening market does seem inevitable. But the good news is there are strategies you can use to prepare yourself.
Preparing for the Worst
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 North Providence, 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 North Providence, RI
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 North Providence, 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 North Providence, Rhode Island.
We have specialized knowledge of the local housing market in North Providence 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 North Providence, 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.