We wish we could pull out our crystal ball and give a definitive answer to this question. There are economic arguments to be made on both sides of the issue.
Signs That A Bubble Is Brewing:
- Rapid price increases: Home prices have soared in recent years, particularly during the pandemic. Such a steep rise in value is a hallmark of asset bubbles.
- Low inventory: For many reasons, folks are just not listing their homes, and this shortage of available homes is keeping prices high.
- Rising interest rates: The Federal Reserve's interest rate hikes have made mortgages more expensive, potentially leading to a decline in housing demand and a correction in prices.
Signs That It’s Smooth Sailing Ahead:
- Strong underlying demand: Demographics, such as millennials entering prime homebuying age, suggest continued demand for housing.
- Tight lending standards: Unlike the 2008 housing bubble, lenders are currently enforcing stricter lending standards, making it less likely for unqualified borrowers to obtain loans and default on them.
- Regional variations: The housing market is not monolithic, and some areas are experiencing slower growth or even price declines. It pays to know your market.
So what is a real estate investor to do? We recommend taking a cold, hard look at your numbers. Be realistic when estimating critical figures like your after-repair value or rental income:
- Contingency Reserve: Factor in a cushion for unforeseen carrying costs in case selling your property takes longer than expected.
- Do Your Homework: Make sure that the demographics and economic trends in your market support your estimates.
- Be Flexible: Put together a Plan B in case Plan A doesn’t come to fruition.
Maybe you had planned a short-term fix and flip but can’t find a buyer. Pivoting to a rental loan may be your best bet. Our fix and rent loan products are a great solution for this problem:
✅ Initial Fix and Flip Loan Up To 90/100
✅ Complete Rehab
✅ Refinance To Long-Term Rental Loan (DSCR)
- 30. 20. 15 Year Fixed
- 5,7,10 Year ARMs
Having flexibility when it comes to your exit strategy is becoming more and more critical for success in this space.
We can’t say exactly where the housing market is headed in 2024 but we can tell you that we will be here to help you sort it out. If you’d like to know what rate and terms we can offer you for fix and flip, bridge, DSCR, or new construction financing, just click the link below and submit a pre-application. Have specific questions? Reach out to your loan officer directly or call 888.444.3160 to be put in touch.
https://www.gonavcap.com/signup
If you’re looking for more details about the housing market and predictions for the year ahead, here are some resources to help you form your own opinion:
- Forbes: Will The Housing Market Crash in 2024? Experts Give 5-Year Predictions: https://www.forbes.com/advisor/mortgages/real-estate/will-housing-market-crash/
- Bankrate: Is the housing market going to crash? What the experts are saying: https://www.bankrate.com/real-estate/is-the-housing-market-about-to-crash/
- U.S. News: When Will the Housing Market Crash?: https://gordcollins.com/real-estate/us-housing-market-looking-strong-2016-to-2020/
We look forward to working with you!