Housing Market Crash: Is Now a Good Time to Buy Real Estate?

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The past few years have been a wild ride for real estate. This has caused many to wonder if the market will come to a screeching halt in 2023. 

Many Americans, especially younger generations, are hoping for a real estate housing market crash in order to purchase their first home. Surveys show that 80% of all Americans, and 86% of Gen Z, want a housing market correction. So, is the housing market predicted to crash? 

Will There Be a Housing Market Crash in 2023?

After a few years of rock bottom interest rates, the national average 30-year fixed rate mortgage was 6.28%, as of April 10, 2023. In February 2023, the number of homes sold year-over-year was down 21.9%, while the median sale price was down 1.2% year-over-year, according to Redfin. 

While many buyers and sellers are anxiously waiting to see what happens next, Ruth Shin, founder and CEO of PropertyNest, based in Brooklyn, New York, said a complete housing market crash this year is unlikely.

“It is not currently a great market for sellers and is turning more and more into a buyers’ market, with the peak yet to come,” she said. “Mortgage rates and interest rates are still high, as are the prices.”

While sales prices have slightly declined and properties are staying on the market longer, she said there has not been a sharp price drop.

“On the contrary, in certain real estate markets in places like New York City, Los Angeles and Miami, prices are high and will remain so in the highest-demand areas, even when interest rates peak,” she said. “Although the Fed will probably raise rates again not too far from now, we will see a lag with serious home price slashing.”

More significant price drops might happen, but she said that probably won’t happen until mid-to-late summer.

“The conditions, while at times extreme in the past few years, are nothing like they were leading up to the housing crash in 2008,” she said. “There is a bubble to burst but not at the same dramatic level.”

What Will A Market Crash Look Like?

Only time will tell if a crash will occur at any level. If it does, here’s a look at some potential impacts.

Young People May Be Forced To Live With Their Parents Longer

Not only could a housing market crash prevent young people from purchasing their first home, but Sternhell also said it could keep them from being able to afford an apartment. He said high levels of inflation affect younger people the most because it limits their saving power.

“High inflation has also caused a decline in real wages, in addition to the decline brought about by the Great Resignation and the rise in the digital nomad lifestyle,” he said. “The knock-on effect of this is that buying property is a less realistic option for many Americans, including the millennial generation.”

Consequently, he said a housing market crash might impact younger people the most, as it could severely limit their ability to live somewhere outside their parents’ homes.

Home Prices May Fall

Great for buyers, but not so much for sellers, Sternhell said a potential crash could impact the asking prices on homes for sale.

“With higher interest rates and prices increasing, potential home buyers will be put on the sidelines, which means fewer properties will sell,” he said. “And [if] that’s the case, sellers may have to reduce their asking price and get less than expected.”

Buyers With More Cash Will Face Less Competition

Rising interest rates might have taken some buyers out of the market, but Nicole Beauchamp, NYRS, senior global real estate advisor and licensed associate real estate broker at Engel & Völkers, said some may benefit from this.

“This is an opportunity for the purchaser who can execute or put down a larger down payment to compete in a less competitive environment,” she said. “Market dynamics can vary wildly by markets, but broadly speaking, despite the continued inventory crisis the competition is lessened.”

What To Do If You’re Looking To Buy a Home

If you’re looking to buy your first home or are currently invested in real estate, it may be a good time to keep an eye on the markets and prepare for possible market corrections later this year. For planning assistance, it may be a good idea to consult with a professional.

Chris Ozarowski contributed to the reporting for this article.

Information is accurate as of April 10, 2023.

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