No, Don't Wait for Real Estate Prices To Crash Before You Buy, It May Be a Long Wait

The assault on your senses with fake news in real estate continues.

This week's two biggest offenders.

First, Yahoo Finance. They ask "Should I wait for real estate prices to crash before I buy a house?"

It is a statement embedded in the question, designed to scare the party questioned. Of course, you should wait if you know prices are going to crash, but (a) who knows when that will be, and (b) will it ever happen again? The article actually lists 3 good reasons why housing prices will NOT crash. Oh, so if prices are NOT going to crash, how does the headline make ANY sense?

The 2nd offender of the week is CNBC, which pronounces "The Housing Market Enters a Recession." 

Now, amidst a national debate on the definition of an economic recession, there is no definition of a housing market recession. And who does this affect, it sounds ominous? Once you see the information, CNBC is saying that sales for real estate will go back to pre-pandemic levels, as will new home building. That does not sound so bad, does it?

Here's a bonus source of misinformation: The California Association of Realtors. They help feed data to the real estate industry press with their data. They issue a weekly update on the market compiling all MLS data from across the state. As you can see, 2022 looks worse compared with 2020 and 2021 with lower sales, less pending sales, and more inventory.

And this seems ominous. Except, notice how the median close prices have continue to rise. Normally, a weakening market will experience price pressure or lower prices. But when you compare the real estate industry to pre-COVID, you will notice that we are still in all-time low inventory and recently entered into pre-COVID records for pending home sales.

I think Zillow found the right word, as their headline this week says the market has rebalanced, and I think that's accurate, that it was rebalanced to pre-COVID market levels. Inventory is still tight, so prices cannot adjust down much, and the drop in rates during July and August caused a pickup in activity.

But even Zillow has to try to exaggerate the facts. They report, accurately, that the percentage of homes with price cuts has increased from 11.1% last year to 18.6% currently, yet that is only slightly higher than pre-COVID levels, and they use a misleading chart that exaggerates the incline by using an axis of 0 to 20% so the current number seems much higher that it might if the axis was 100%, which would be more accurate.

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Bill Gross, The LAProbate Expert
I am a real estate broker in Los Angeles, CA focused on probate real estate and the leader of a team of over 1,100 agents nationally probate experts.

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