RE PRICE MOVEMENTS

As mentioned in the previous post, when discussing whether "prices will crash," it's essential to define the term and establish a reference point for clarity.

In financial markets, the word "crash" lacks a strict numerical definition, but it generally refers to sharp declines of over 10% in a stock market index within a few days (as noted by Wikipedia). In real estate, however, price movements are often harder to quantify and can be challenging to grasp without proper context.

To make this more relatable, here's how I break down price levels based on how brokers commonly describe their listings:

1.⁠ ⁠Good Deal: A property priced below the asking price of similar listings.

2.⁠ ⁠Fire Sale: A good deal where the seller aims to sell at acquisition cost, essentially just getting their money back.

3.⁠ ⁠Distressed Sale: A fire sale where the seller is willing to take a loss, selling below acquisition cost. The longer they wait, the larger the potential loss.

Using these terms, we can better frame discussions around price movements in real estate, making them more accessible to everyone.

So will the RE market crash?

Continued in the next post...