Crash, Bubble, Correction; these are all phrases you will hear tossed around when it comes to real estate. More popular in recent months is the term “correction.” Most real estate experts are describing the present condition of our market today as a housing market correction.
While there is no official definition of what makes a housing market correction, it is generally described as a condition when homes get too expensive, or consumers can no longer afford them. At that time buyers stop purchasing real estate and the market must adjust to spur buying activity once again. Much like the old adage, “What goes up, must come down.”
A housing market correction is when home prices experience a moderate decline following a period of rapid growth. The purpose of a correction is to naturally adjust prices in line with affordability, demand, and supply, thus restoring a more sustainable and balanced state to the market. The length of time the market remains in this correction condition may be anywhere from a few months to a year or more.
A housing market correction and a housing crash are not the same thing. With a correction, things are simply coming back into balance. Prices may fall slightly, whereas in a crash, prices fall more significantly and usually unexpectedly.
It is expected that there will be a mild price softness through the end of this year. This is described as a 0.6% dip in the typical sales price in 2023 compared to 2022.
Because of the limited housing supply, we may not see substantial home price declines even though affordability is far below recent norms.
If you or a client are hoping to purchase or refinance during this correction phase, but can’t qualify for a conventional loan, Sun Pacific Mortgage is here to help with a privately funded loan. Simply give us a call at 707-523-2099 or find us at www.sunpacificmortgage.com.