As we wind down the fourth quarter of 2022, real estate values have continued to drop considerably. This is mainly due to the current pandemic-induced recession, with millions still unemployed and unable to afford housing prices that remain high despite plummeting demand for properties. Additionally, geopolitical uncertainty and stock market volatility have further driven down buyer interest and resulted in fewer home and commercial transactions.

According to a recent report from Inman, here are some of the trends that have shaped the last 12 months:

• Mortgage rates soared
• Thousands of individuals lost their jobs
• The big ibuyers and institutional investors have all reported major struggles
• Chief executives from Many of the big real estate firms have been let go
• Real estate-related stocks plummeted

According to Redfin (One of the above-mentioned ibuyers), real estate investors of single-family homes dropped 32.3% in the third quarter compared to the same time last year. Because of this downturn, many homeowners and investors will find their properties worth less than what they initially purchased them for, which could lead to difficulties if they intend to sell or refinance anytime soon. Both home buyers and investors are already showing signs of their unwillingness to buy overpriced properties. They are using a wait-and-see approach in hopes that opportunities to purchase distressed assets at a discount may lie ahead.

The “build to rent” model was the hottest development concept in the housing market before the downturn. To explain further, most build-to-rent homes are constructed as an entire complex that takes on the shape of a neighborhood that often has amenities like pools, playgrounds, dog parks, and more. One of the largest companies that buy these developments, American Homes 4 Rent, cut its purchases by 80% from last year because homebuilders are still trying to get the prices they were selling for last March. Unfortunately, that's not working out so well for them.

As we have mentioned, potential buyers and investors should pay close attention to this coming downturn as it may provide a prime opportunity to acquire property at more affordable prices. With the right strategies, all parties can take steps to protect their investments and hopefully come out ahead. Unfortunately, it's also clear that some who purchased properties over the past few will be in trouble.

Finally, we're aware that not everyone has the time to keep their eye on the ball. So, the good news is, we have your back! You’re probably aware by now that we stay actively involved in the real estate market and pay attention to the current trends in order to be better equipped to make intelligent, informed decisions about navigating this downturn and coming out ahead.

We will continue to keep you informed as we continue to travel through these changing times.

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If you have questions about any of this or would like to learn more about taking advantage of the possible financial opportunities that lie ahead, please reach out to us or schedule a call.

Investing for Impact,

Randy Hubbs