What Is A Bear Market In Houston Real Estate? It’s A Different Animal Than You May Think
Here's Why Bear Market Matters To Houston Real Estate
The US housing market is experiencing a cool-off. It is because the US economy has experienced significant shifts this year. Mortgage rates increased this year. Inflation shot up to 8.2%, and the housing market stalled.
The S&P 500 index fell 21.3%, entering a bear market. We know this was terrible news for the stock market. But how does it affect the Houston real estate market? Here are the key things you should remember — as well as how to capitalize on the significant changes that await Houston real estate.
Related resources:
- Houston Housing Market Has Slowed: Should You Buy A House Now?
- Houston Home Sale Stalled? How Long To Wait Before Lowering Your House Price?
- Houston Properties Marketing Platform | Sell Your Home Fast For More Money
"Our experience working with the Houston Properties Team is exceptional. From day one, we felt as though we had a personal team handling the sale of our home. They consistently provided us with reports and advice on how to proceed. All their efforts not only lead to a successful and lucrative close but also eliminated a great deal of the anxiety and pressure.” – Arpita Niranjan
Table of Contents
- What Is A Bear Market In Houston Real Estate?
- Know When To Buy Or Sell Real Estate In A Bear Market
- Who Benefits From A Bear Market In Real Estate?
- Remember: A Typical Bear Market Is Not A Bear Market In Real Estate
What Is A Bear Market In Houston Real Estate?
"We had the pleasure of working with the Houston Properties Team. I must say from start to finish they were absolutely amazing. Very knowledgeable on the properties and things we needed to be looking for especially with being first-time home buyers. When things got bumpy they were always there keeping us uplifted and In the loop. I highly recommend the Houston properties team for any of your home buying needs. We couldn’t be more pleased!!!" - Clarissa (Google Review)
A "bear market" in real estate occurs when prices decline by 20%. It has only happened once in the Houston real estate market in at least 35 years. But it happened in the stock market five times over that period. Compared to the stock market, real estate prices tend to be steadier than prices in other asset classes.
The last bear market in real estate was in 2008. When home values plunged, many homeowners fell into foreclosure. But some homeowners and investors are having flashbacks to those years as the market changes. Our best Realtors say there's no reason to panic since this era is very different from 2008. Also, home buyers in the last three years have much equity.
A typical bear market gets more than a 20% price decline. But we're not seeing that in real estate. Although the asking prices might be lower with the increasing inventory, that is still not an actual decline.
There is an existing housing inventory shortage, with continuous demand to outpace supply. An American household formation age is in the early 30s. There are still a lot of buyers who are looking for their first home.
Houses are dropping in value. But they see that homes aren't getting three times their actual deal. Unlike a year ago, places earn twice what they're worth.
Know When To Buy Or Sell Real Estate In A Bear Market
"The Houston Properties Team helped make the purchase of our first home so much less stressful, especially in this market. They kept in constant communication and helped us navigate the process from beginning to end." - Meagan Joacim (Google Review)
The real estate market goes through less dramatic shifts. A big reason is that the need for real estate is constant. There is always a need for a place to live. Businesses will always need space to operate.
In 90% of the bear markets in the last 70 years, real estate continued to add value to its worth. The average housing price of single-family homes in Houston was $329,801 in September 2020. It increased to $414,776 in September 2022. It left many first-time homebuyers struggling to find affordable homes.
As the economy has changed this year, interest rates have almost doubled compared to 2021. But it is still an excellent time to buy, regardless of the rising rates and economic changes.
Real estate is always a proven asset. Buy assets, not liabilities. Real estate is your best "asset." But, as cryptocurrency takes off, there is a decrease in the number of real estate investors as investors pour all their money into crypto. However, they planned to turn it back into real estate when crypto started to crash.
If you buy or sell in real estate (during a bear market), you must have a trusted real estate professional. The Houston Properties Team has proficient agents who understand the market and investments. There are different ways to buy or sell real estate. You just need to find the right market for you.
Who Benefits From A Bear Market In Real Estate?
"The entire Houston Properties Team was excellent to work with. Incredibly informed, proactive, and responsive, we could not have been happier with our Houston home search and the property we purchased. Will definitely work with this great group again in the future." - Kathryn Kaufman (Google Review)
Despite the economic challenges in 2022, the real estate market is strong. Opportunities exist for buyers and sellers who are looking and ready to move. This year's changes in the housing market were favorable for buyers, mainly first-timers.
For the last two years, a lot of overbidding on homes has occurred, something many young clients couldn't afford. Single-family home sales are 17.4% ahead of the record pace set in 2020. Last year, 12,036 sold units, added a 9.2% increase in total Houston real estate transactions.
Buyers have a higher chance of discovering a property they can afford. And have their offer approved because the market is less competitive. Rates are higher, but adjustable-rate mortgages and seller buydowns are resurgent.
The market usually cools off as we get into the second part of the year. A bear market will make it easier for buyers to buy a home. Along with the macro trends, they will have an easier time buying and face less competition.
If home prices decline and we enter real estate bear market territory, we still have an advantage. Experts don’t expect this to happen soon. Still, buyers and investors have opportunities in the market environment if it does. You can profit from the declining housing costs by holding discounted properties until their values rise.
"Buy low, sell high." Investors who make wise buys can result in large profits.
Remember: A Typical Bear Market Is Not A Bear Market In Real Estate
"Our experience with Houston Properties Team was fantastic and we are very grateful that we made the decision to hire their team when we did. We were looking for a dynamic group of people with a great reputation in the Houston area, that could promote and sell our house in a relatively reasonable time, using the most suitable marketing tools, and we were not disappointed." - German Torres (Google Review)
If you’re considering buying or selling a property, remember that DOM in one location may not be accurate in another. Ask your Realtor how quickly other Houston areas are selling or buying compared to yours.
The changes we've been seeing in real estate indicate that the market is returning to normal. After a few record-breaking years, we’re still in a healthy market. Values continue to increase, and banks are still lending.
The 2021 buying stir was due to COVID-19, which we did not expect. Now, we’ve gone back to a typical real estate market.
A reliable real estate expert is a great way to ensure you can handle the current market circumstances. The Houston Properties Team follows a 152-step listing marketing checklist, regardless of the market condition, to optimize your investment. Our agents have an excellent understanding of the effects of recent market moves. To provide significant help in making the most of a bear market.
Use Houston's Online Home Valuation tools to get a snapshot of your location. We can also provide a custom report of your property's value.
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