As we go into 2022, it may be difficult to feel optimistic. Simply on an economic level, the twenty-first century has thus far had its fair share of catastrophes. The pandemic was the trigger for the latest economic crash, and while the economy has seen a great recovery over the past year, there is no guarantee this will continue.
The real estate market has had a huge part to play in the economic ups and downs over the past two decades. It was the housing bubble bursting that led to the 2008 depression, and it is currently the housing market that is seeing the biggest upward trajectory. Prices dipped at the start of the pandemic, but since then they have been soaring. A severe decrease in supply due to manufacturing delays and limited movement has driven property values up.
When prices rise this rapidly, there is always fear of a crash, and that fear is only compounded by the fact that instability has driven this rise. The bad news is that a crash may well be coming soon. ‘Rich Dad Poor Dad’ author Robert Kiyosaki certainly thinks so.
Kiyosaki has sounded a warning that we can expect a stock market crash and economic crisis in 2022. But how will this impact the property market? If you are considering buying property, is it better to wait?
Robert Kiyosaki has earned a place as an authority on the US and global economies. However, that does not mean his predictions will come true. In fact, he has been tweeting about a coming economic crash since at least October 2020. Thus far, his dire warnings have not come true.
On the flipside, the longer a bubble lasts, the bigger a potential crash will be. If the property market, for example, had crashed at the beginning of 2021, property owners would have lost far less value than they will if the crash comes in 2022.
The reality is that the perks of investing in property come in spite of the risks. There is always the potential of a property market crash, and since property does not have the liquidity of other major assets, property investment requires decisive thinking even when there is no real clarity.
Regardless of whether Kiyosaki’s prediction comes true, it is a good idea to keep an eye on the property market with investment in mind. Here is why.
If we ignore Kiyosaki’s prediction, as people have tended to do over the past year, now may be a good time to invest in property. It is not nearly as good a time for investment as a year ago, but hindsight always leads to regret. The simple fact is that property prices are still rising. If you believe that there is no crash coming, now is the best time to invest in property.
If Kiyosaki is correct, investing in property is still a great idea. However, your investment should wait until the crash happens. Kiyosaki himself has stated that he plans to cash in on the coming crash. He says that he will stock up on real estate, among other assets, when the crash comes. For people who have not been bankrupted by a crisis, the best time to invest is always after a crash, after all.
Looking at these two potentialities, the safest route to take is to wait. Investing in property now could lead to huge financial trouble in the near future, while waiting to invest could, at worst, leave you without the investments you hoped for.
However, for those who are not too risk averse and who are confident in the stability of the property market (especially in a world that has learnt lessons from the last crash), the risk may seem worthwhile.
This discussion is far easier to stomach when speaking about potential investments. What if you need a place to live?
When buying a home to live in, you want to get the best possible price. However, what is most important is that you find a house you love at a price you can afford. While a potential crash in the real estate market may leave you with regret in hindsight, it probably won’t affect whether you can afford to pay your mortgage. On the other hand, waiting for a crash that never comes could leave you in a position where housing is unaffordable.
The reality is that everyone would love to make real estate decisions based on investment opportunities, but that is not the way the world works for most of us. We buy homes when we need to, rather than when it seems to be the right time based on the market.
If you do want to invest in property, the safest route is to wait and see if that crash does come. However, if you're looking for an affordable place to live, waiting may be the worst possible decision.