Market Crisis?

Are we in for a Market Crash?

• 
• By Nancy Smith
• Qualicum Beach REALTOR®
• Published: Oct 26th, 2023 at 10:33 am

With all the talk about the coming 'market crash', what is happening in the Commercial Investor/builder situation?  As there is an "assumed' seven year real estate market cycle, one can not depend on that data for speculation. As in spikes and drops in the market, we have just seen a huge spike in a very short period of time in interest rates.

Anything that booms, like is suggested for the 2019 - 2023 real estate pricing spike, also suggests a fast rebound to lower interest rates. Institutional Investors have made good money over the past five - seven years, and even though interest rates were nearly negative, institution investors were still cautious, as they need to have a 25 - 40 year perspective. 

Demand has bottlenecked for the average citizen with high end homes being built and pricing escalated quickly, catching the average citizen in a world where rentals were not being built, airbnb was flourishing, and average buyers ended up on the sidelines.  The demand is still there, and perhaps high-end homes will have to take a haircut on prices, but the lower end market will keep the low-end in price escalation wars. 

When interest rates drop significantly, scared buyers will again enter the market and push up prices and profits for Institutional Investors.  Factor in the exuberant spending of the US government, adding trillions to their debt, inflation will continue to soar, which for the average person, means 'prices go up', though the buying power of those 'profits' keeps sellers poor.