A number of factors contributed to the major spike in real estate values, which have shot up over 30% in many parts of the country. Some of these factors include the extended period of low interest rates as well as remote work causing the migration trends to Sunbelt states and suburban areas to accelerate.
As interest rate hikes reduce buying power and add to the overall cost of homeownership, many people are expecting housing prices to plummet and the rising fears of a recession are only adding to the concerns around the real estate market.
According to Suze Orman’s recent interview with Yahoo Finance, the famed financial advisor doesn’t think the U.S. is in for a housing crash. “Well, I think the tables have turned a little. I don’t think you’re going to see homes go down really in value.
“You know, the truth is real estate always does pretty well in a recession if you think about it. And we are used to 17%, 30% gains over the past two or three years on real estate. I think if you own real estate, you’re not going to see it go down dramatically. Maybe you’ll see it go up only 5% or 7% a year.” said Orman.
Orman was mainly talking about the housing market as it pertains to owning a primary residence. However, the future of the housing market is also a major concern for investors who own single-family homes as rental properties.
Real estate investors have even more to be optimistic about, especially since rental rates are expected to continue increasing in many parts of the country. Even if home values come down a little, rising mortgage rates continue to hurt affordability, which is a primary driver of rental prices.
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