The last big recession in 2008 and the economic impact of Covid19 have left real estate investors afraid for what's to come. According to Seeking Alpha, the real estate market has been frozen by the rapid pace of the Federal Reserve's interest rate hikes, putting the housing market on course for an imminent collapse in 2023. They continue that home prices are dropping and are likely to plunge in the same year.
A collapse in the real estate market could see a rise in foreclosures and inflation. This threatens anyone trying to build wealth or get by with a salary.
Real estate expert Noelle Randall shares her insights on the Upcoming Real Estate Collapse in 2023.
The real estate collapse explained
"In most cases when people are talking about a housing market crash, they are just talking about a recession," Randall shares. She explains that a recession is a downturn in the economy and is defined by a decline in Gross Domestic Product (GDP) for two consecutive quarters. Recessions are marked by high unemployment, lower interest rates, low demand, and decreased consumer spending.
She continues, "The country's GDP is down because people are not buying as much and the demand for products and services are down, so people are making less money. As a result, many companies are either going out of business, lowering pay, or not hiring."
Randall explains that industries, in general, have largely recovered from the recession caused by the Covid19 pandemic. However, utilities and property prices rose significantly in 2021, and incomes could not keep up.
"Inflation should usually rise by about 2% yearly. Unfortunately, we saw it rise over the past year to around 7%. On average, incomes only rise about 2-3%, and that's a problem." Randall continues.
Randall explains that if no one can pay for properties because prices are rising and incomes are stagnating, this will eventually cause real estate prices to fall drastically due to lower demand. This could spell trouble for real estate investors and the economy.
How to survive the next recession
Randall was a victim of the 2008 global financial crisis and had experienced navigating and thriving during a recession. She advises preparing and starting early.
She advises turning side hustles into full businesses and getting a business license before the collapse, emphasizing that the government and banks lend money to businesses during recessions to help jumpstart the economy.
She shares, "America is basically a corporation that loves helping businesses grow. They have money and grants for businesses. So open your business, get a merchant processing account and turn your side hustle into a business."
Randall found her success in real estate, but she encourages people to explore their skills and turn that into a business. The coming year will be challenging for the economy, and people should prepare for what's to come.
With this, she is encouraging people to invest in sharpening their skills on business credit by joining the Business Credit Challenge webcast event. In one weekend, people can dive deeper into real estate and use it as leverage for their future business endeavours.