Charismatic real estate guru, social media influencer, and private equity fund manager Grant Cardone says the U.S. real estate market is headed for a major correction. The real estate investor used his bold words to prove his belief: “We are entering the biggest real estate correction period of my lifetime.”
Factors influencing real estate market conditions
Many factors can affect the real estate market, from supply and demand to interest rates and economic instability. One of the main factors restraining demand at the moment is high interest rates. Under these circumstances, we are also seeing a decline in housing prices, although this varies by region.
According to the National Association of Realtors, the single-family home market remains strong, with the median sales price of existing homes steadily increasing since 2020.
Year | median price |
2020 | $300,320 |
2021 | $357,100 |
2022 | $392,800 |
Impact of the pandemic
The past few years have been one of the strangest real estate markets investors and homeowners have seen in a long time. It started with the pandemic, which changed the way Americans work and live.
Some speculate that the pandemic economic response has put large amounts of cash into the hands of Americans through various financial assistance programs, including stimulus checks, Protection Program (PPP) loans, and the Economic Injury and Disaster Loan (EIDL) program. As this money poured into the real estate market, prices rose, especially in the housing market. But Cardone doesn’t think the amendment will have much of an impact on single-family homes.
Additionally, the option to work from home meant people were no longer tied to a physical office, prompting many to relocate based on preference rather than employment status. This mass relocation pushed prices even higher in high-demand locations like Texas, Arizona, and Florida.
As the initial concerns about traveling during the pandemic fade, the benefits of Airbnb bookings trickle down to residential real estate, with more people buying investment properties and the new trend of hosting for extra cash. I started using .
Airbnb claims in its 2021 report that new furnished rental hosts made $1 billion during the pandemic. Los Angeles, the Smoky Mountains and Atlanta hosted the highest returns, further fueling home price growth.
Is commercial real estate at risk?
With all of these factors at play, the return to the office has not been as robust as expected. The recent bankruptcy filing of WeWork, a company that owned and rented co-working space, may be a sign of things to come in the commercial real estate space.
A 2023 report from global management consulting firm McKinsey & Co. analyzed the demand for office space post-pandemic and found that “in most superstar cities, asking rents in real terms will similarly decline due to fewer people coming into offices.” “is decreasing.” The report found that “Rent prices in New York City fell by 18% from 2019 to 2022. In San Francisco, they fell by a whopping 28% over the same period.”
Seek opinions from other experts
Glenn S. Phillips, chief economic analyst for Lake Homes Realty and Beach Homes Realty, operates real estate brokerages in 34 states. “Based on our data and market analysis, single-family residential real estate remains strong, with prices expected to remain flat or rise slightly in 2024,” he said. He added: “Other sectors have some serious problems and sooner or later (as always) they will correct themselves.”
Other real estate investors agreed with Cardone’s assessment that we are approaching a “great opportunity for individuals and the general public to actually acquire trophy properties from institutions.”
Total Wealth Academy CEO Steve Davis helps people grow their net worth with passive real estate investing. he said: “I happen to agree with Cardone on this matter. We are already seeing dramatic price declines from sophisticated sellers who recognize that rising interest rates are making real estate less valuable to reliable buyers. I am.”
Davis’ real estate investments are already benefiting from the predicted correction. “In the past three months, he has found three apartment complexes that are well below appraised value.”
How can I prepare for this real estate fix?
As the old saying goes, cash is king. If you want to acquire valuable real estate at a bargain price, the first thing you should do is save up enough cash to do so. Essentially, all you have to do is build up your savings and have enough cash to play when you need to.
The assets most likely to take a hit will be commercial real estate, such as office buildings and apartment complexes. You may think you won’t have enough cash to buy a property in these price ranges, but don’t give up too soon.
You may be able to invest in these distressed or depressed assets in a variety of ways, including:
- Purchase a small apartment complex or strip mall property.
- Form a partnership or LLC to invest in real estate.
- Investment in real estate syndicates (investment groups).
If Grant Cardone is right, investing in the above will give you the opportunity to build huge amounts of wealth over the next few years.
GOBankingRates Details
Source link