HomeSellers & HomeBuyers: How To Prepare For A Real Estate Market Correction!

Monday, March 13, 2023   /   by Matthew Daniel Tamburello

HomeSellers & HomeBuyers: How To Prepare For A Real Estate Market Correction!

Courtesy of:
Matthew Daniel Tamburello
Team Leader & Broker
647-697-6743
matthew.thetamburelloteam@gmail.com

As a client, you'll want a trusted resource for your real estate needs and goals. You want to have the insights and experience required to navigate changes in the market and better understand the ups and downs that naturally arise in the real estate sector.

Real estate agents - quality ones anyway - understand that a market cannot perform well perpetually. A natural rise and fall in prices always occurs. When you start to see signs of a market correction, you want to know how to prepare so you can make the best real estate decisions for your individual goals.

What is a “real estate market correction”?

A real estate market correction can generally be referenced when the value of homes falls 10–15% below the market average. When the value of homes starts shifting like this, it can cause changes in how buyers and sellers look at the market and how they plan their real estate decisions.

Within the luxury housing market, noting these changes has particular significance. Changes that indicate a market correction are often felt particularly strongly in the luxury housing market. Typically, this sector sees the first signs of value reduction and home values see the most dramatic changes in price. Therefore, buyers and sellers will want to make sure they fully understand these conditions as they evaluate the market.

The luxury real estate market: How to prepare for changes?

You’ll want to make sure you have adequately prepared yourself for the changes. Luxury home clients will likely want access to detailed information about the current economic conditions and how it compares to similar past experiences. Here are some key pieces of information you will want to have at your disposal:

1) Current housing market data that explains performance

Many in the market have already seen signs that prices have begun to drop, but they want to know how it will impact them and by how much. You’ll want to come to the realization prepared with relevant market data specific to your property. Insight, such as how long similar homes have sat on the market in recent days, the call rates for different properties in similar markets, and any substantial price adjustments that other homes in the area have utilized. Having this data can help see how your property fits into the broader market pattern.

2) Interest rates and stock market data

You'll also likely want to see data and information related to shifting market conditions and how the real estate market influences, and is influenced by, factors such as interest rates and the stock market. Just like any other client, luxury clients know that interest rates will impact the value of the house they can buy, and following interest rate data can help them evaluate the current trends.

Luxury buyers also generally have sizeable portfolios of investments on the stock market, and many will look at their investments when evaluating their liquidity and the assets they have available. Therefore, buyers want to know how the stock market trends align with the real estate market.

3) Past real estate market corrections

Finally, you’ll want to be equipped with information about how your area and the luxury real estate market in your region fared during past market corrections. Data about how low prices dropped and signs of the turnaround can help you evaluate your current position in the correction and how you can benchmark the current situation. For example, you might use data points from the 2008 Recession and let clients know how their market is currently performing compared to that time period. These benchmarks can help buyers and sellers feel more confident in their decisions.

For additional information and a detailed assessment on how a Real Estate Market Correction impacts you, contact Matthew at 647-697-6743 or matthew.thetamburelloteam@gmail.com.

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Matthew Daniel Tamburello
Team Leader & Broker
Right at Home Realty, Brokerage

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