Are we in a recession? Do we see a housing bubble in the likes of 2006-2008? While the media is giving us so much conflicting information and (what we call) fear p*rn, we need to turn our attention to experts with proven track records. 

That’s where people like Barry Habib come in. Barry is the CEO of MBS Highway and an expert on the mortgage and housing industry. He is widely credited for saving the mortgage industry during the Covid Pandemic and was awarded for the most accurate real estate forecast of 150 top economists in the US.

Recently, Barry Habib shared his thoughts on the current state of the market and how it's affecting buyers, sellers, and homeowners. As the man dubbed America’s top 100 people to watch in 2023, I take his word at its value. 

Bursting the “Bubble” Theory

One of the most influential factors in the housing market is the balance between supply and demand. It’s the most basic economic principle. When demand for homes is high, prices tend to rise as buyers compete for limited inventory. Conversely, when there is an oversupply of homes on the market, prices may drop as sellers compete for buyers.

Why is this important? With people comparing the current real estate market to that of the early 2000’s crash, there’s a fundamental difference here that many aren’t noticing: the decrease in inventory. 

According to Barry, back in 2007, there were 4 million units for sale. Today, there are only 1.14 million. That is a DRASTIC drop in inventory. Now add to the fact that of those 1.4 million homes for sale, there are 384,000 under contract. 

While our inventory has reduced, our population has increased, so the need for housing is still significant. This ongoing demand with limited supply should support the market. Even so, we simply don’t have the kind of inventory that could see a housing bubble. 

Are we in a Recession?

This is such a tricky question to answer because the goalpost for what a recession is keeps getting moved. It used to be that if you had two consecutive negative quarters on gross domestic product, that was considered a recession (which we had, by the way). Now, the rules try to follow the iGDP, which doesn’t indicate a recession yet. 

Barry takes a bird's eye view of the situation to look at what’s happening in the market. In other words, what is really happening with people’s wallets and spending habits? 

The reality is people don’t feel as financially stable, but they want to maintain the quality of life they had during the stimulus check days. So what has happened is people are living off of credit cards while drawing down on their savings. 

The other thing people look at is the unemployment rate. People would naturally assume that when the unemployment rate is high, that indicates a recession. That is not the case! In fact, the indication of a recession is when unemployment is at a low point and starts to rise. That is the point we are at right now as an economy. 

Add this information to the activities of the Fed, and there are many indications that our economy is currently sick. A recession could very well be imminent or already here. 

Opportunities in the Housing Market in 2023

While you would think the housing market would take a hit, the last few recessions have seen home prices hold up better than expected. Barry Habib talked about 2023 showing signs of improvement and stabilization as time goes on. 

While there will be ups and downs regarding interest rates and prices, we will see the numbers become less inflated. We have a tight inventory and inflation coming down, which leads to mortgage rates coming down; with these ingredients, we should see more buyers. 

Currently, we are still in a slow time. This is an excellent time for a buyer, especially at the start of the year, while people are occupied with holidays and parents with kids in the middle of the school year. Now is the time to take advantage and get the home of your dreams at a discounted price (using points or a 2-1 buy down) and sell when housing prices appreciate as the market rebounds. 

Final Thoughts

The economy is not healthy, and uncertainty is controlling wallets. As Warren Buffet says, “be fearful when people are greedy, and greedy when people are fearful.” Now is the time to make moves in the housing market. 

Remember, you’re not the only one playing chess with the market. Other people are trying to take advantage of lower prices. You must be decisive and act now to negotiate the best deal for yourself that yields long-term rewards. 

According to experts like Barry Habib, who has a firm grasp on market forecasts, the best time to move is at the point of maximum pessimism, which is right now.