According to one major investment bank, the worst of the US real estate correction is already behind us, and the market could soon be on the uptick again.
Is it true? If so, many property owners and businesses will be very happy. Yet, history probably paints a different picture of what’s coming. Many investors are currently enjoying a sweet spot in the cycle they don’t want to end yet.
Are The Deepest Cuts To Real Estate Prices Already Over?
According to Goldman Sachs, the sharpest declines in housing prices are already over for this market cycle. They estimate a total decline in property values of 6%. With the market bottoming out, and rebounding in the summer of 2023, as peak home buyer season comes back.
Of course, this latest proclamation might be balanced with their recent track record, current consumer banking issues, their struggle to get people back to work, and recent layoffs.
The Reality Of The Real Estate Market
A rebound in the second half of 2023 would certainly create a lot of value and some big pay days for real estate investors that have been engaging in the market while others have been so bearish.
The Office Market
However, the real dip in the market may already be much deeper than Goldman is reporting. Bloomberg reports that the office market is just returning to 50% occupancy rates since the pandemic lockdowns.
With all of the current and recent layoffs, that could go far lower in some areas. While being one of the most influential factors in the performance of retail, residential, multifamily, and other real estate sectors where people are moving to.
Housing & Land Prices
All real estate is local, and some markets have traditionally been less boom bust prone and volatile than others. Though both types can have their place in your portfolio and investment strategy.
In some places, properties may already be trading for 25% less than previous highs last year. Days on market have definitely grown much longer. Though many sellers and their agents are not yet realizing the gravity and urgency of the situation. Most of the best deals are still being done off market.
Deals And Motivated Sellers Out There
There are many great discounts to be negotiated, and many highly motivated sellers willing to let assets go for deep discounts. Including builders, small real estate investment companies, major banks, and corporations that have been building premises for themselves.
The real estate correction may or may not be over. Regardless of how it plays out over the next few months, there are great opportunities in income properties, with opportunities to yield windfalls in returns when the retail demand shows up.