Waiting for Real Estate Prices to Drop? Here’s the Risk

Economic uncertainty is back in the headlines. With new tariffs, global tensions, stubborn inflation and talk of a slowdown, it’s no surprise some real estate investors are getting cold feet. You might be asking: “Should I really be investing in real estate right now when the overall economy feels shaky?” It’s a fair question — and one we’re hearing more often in 2025. At LendingOne we believe the answer isn’t a hard yes or no. It’s about perspective, planning and understanding why real estate behaves differently than many other asset classes during economic shifts. Here’s why smart investors aren’t backing down — and how they’re adjusting to stay ahead. The Big Picture: Slower, Not Stopped Let’s look at the numbers. The US economy is growing — just not as fast. According to the Bureau of Economic Analysis (BEA) Q1 2025 GDP was 2.2%, below expectations but still good. Unemployment is at 4.0% and consumer spending is holding even with tighter budgets. But investor sentiment is being spooked by: New tariffs on Chinese goods which have increased costs for builders and developers. Concerns about a consumer slowdown in Q3. Global instability which adds uncertainty to supply chains and equity markets. But major real estate markets — residential and small to mid-size commercial — are stable. Why Real Estate Performs Differently During Economic Volatility Real estate doesn’t react to every economic twitch like equities or crypto. Here’s why: Real Estate is a Hard Asset Real estate is physical. It provides shelter, utility and income — all things people need regardless of market cycles. In uncertain times many investors rotate into hard assets to hedge against currency shifts, inflation or market volatility. Real Estate Gives You Control  You can’t control the Fed’s interest rates. But as a real estate investor you can: Set your own rents Renovate to increase value Refinance when rates drop That kind of control is priceless in uncertain times. Real Estate Cash Flows Dividend stocks pay out a few times a year. Crypto doesn’t cash flow at all. But rental properties? They cash flow every month — and often increase with inflation. According to Zillow, US median rent prices are up 3.2% year over year as of April 2025 — slower than the pandemic peak but still growing. In most areas, rents are holding strong even as home prices level off. What Investors Are Worried About — And How to Respond Objection 1: “Tariffs are increasing construction and material costs.” Reality: That’s true — especially for new builds. But this also tightens future inventory which can increase the value of existing properties. Investors focused on value-add renovations or turnkey rentals may actually benefit. Pro Tip: If you’re building or renovating, lock in pricing with contractors and suppliers early. Also, look at areas where new supply is already constrained — these tend to hold value better. Objection 2: “The economy will go into recession.” Reality: A slowdown isn’t a crash. And historically real estate has often remained resilient — or even appreciated — during mild recessions especially in undersupplied areas. Did You Know? During the 2001 recession US home prices still rose 6.6% nationally.  Even during the 2020 pandemic prices surged as demand outpaced supply. Today housing supply is still below long term averages so even a small drop in demand won’t collapse the market. Objection 3: “My other investments are down — I don’t want to overextend.” Reality: Diversifying into real estate may actually help stabilize your overall portfolio. The correlation between stock market returns and housing is low — they don’t tend to move together. When stocks zig, real estate may zag. Consider: Short- or mid-term rental properties in cash flowing markets. These can produce immediate income while allowing for appreciation over time. What Smart Investors Are Doing in 2025 At LendingOne we’re seeing three key behaviors from experienced investors in this economic climate: They’re Stress Testing Their Deals Investors are modeling conservative rent assumptions, factoring in possible price drops, and underwriting to higher interest rates — and still moving forward when the numbers work. They’re Building Liquidity Having reserves doesn’t mean you’re scared. It means you’re ready. The investors who move fastest when a deal appears are the ones who have access to capital, flexible terms and pre-approved financing. They’re Playing the Long Game Economic cycles come and go. The investors who succeed think in 3-, 5- or 10-year horizons. They know short term turbulence doesn’t stop long term equity growth, rental demand or portfolio expansion. Practical Advice for Investors Feeling Economic Pressure Here are a few things you can do today: Run deal analysis at higher rates and lower rents. If it still works — it’s probably a good move. Focus on local economic data, not just national headlines. Some markets are still growing jobs and population even if national sentiment is negative. Explore bridge financing or shorter loan terms. This can help you stay flexible as the macro picture evolves. Work with lenders who know how to navigate cycles. (That’s us.) Final Thought: Chaos Doesn’t Cancel Opportunity — It Reshapes It Every investor remembers moments when fear ruled the market — and when those who acted early came out ahead. Yes, the economy feels uncertain. But when you zoom in on the data, fundamentals and trends in housing the story becomes clearer: Real estate is one of the most controllable, durable and income generating assets you can own — even when the economy feels shaky. If you’re feeling uncertain but want to keep looking at opportunities let’s talk. Talk to a LendingOne Advisor about structuring a financing plan that works in this environment. Whether you’re buying your first deal or scaling your portfolio we’re here to help you invest with clarity — not fear.

Uncertainty is part of every real estate cycle — but in 2025, it feels especially personal. Investors aren’t just watching interest rates or price charts; they’re reading headlines about volatility, inflation, and market corrections. If you’ve looked at a deal recently and thought, “I’m not sure if this is the right time”, you’re not alone. But stepping back too far can mean missing the window where smart investors find their edge. At LendingOne, we believe today’s market doesn’t call for inaction — it calls for better strategy. In this article, we’ll break down what’s really happening, why instability doesn’t necessarily mean risk, and how to invest confidently even when conditions feel uncertain. The Market Has Shifted — But It Hasn’t Collapsed The term “unstable” often stems from comparison. If you’re comparing 2025 to the overheated pandemic-era market of 2020–2022, yes — things feel different. But different doesn’t mean broken. As of April 2025: The median existing home price in the U.S. was $414,000, up 1.8% year-over-year, according to the National Association of REALTORS® (NAR). Housing inventory rose to 1.45 million homes, a 20.8% increase compared to last year — the highest level in nearly five years. Existing-home sales are running at a pace of 4.00 million, which is about 75% of pre-pandemic levels — steady, not plummeting. Meanwhile, the Case-Shiller Home Price Index — considered a gold standard for U.S. price trends — reported that national prices were up 3.4% year-over-year in March 2025.(Source: S&P Dow Jones Indices) So what’s really going on? The market is no longer in frenzy mode — and that’s a good thing. Volatility ≠ Risk: Why Stabilization Creates Opportunity Let’s be honest: 2021’s 20%+ price spikes were unsustainable. The correction we’re seeing now — slower sales, more days on market, and leveling prices — isn’t a warning sign. It’s a return to fundamentals. In fact, several factors suggest a more balanced, investor-friendly market is emerging: More supply means more choice. Investors can now find deals, negotiate terms, and avoid bidding wars. Price growth is normalizing. No bubble behavior — just steady, inflation-aligned appreciation. Rent growth remains strong in many metro areas, helping support investment properties even if appreciation slows. Here’s the truth: a volatile market shakes out the noise. When casual buyers step back and overleveraged players exit, savvy investors step in. What Are Smart Investors Doing Right Now? At LendingOne, we’re seeing the most successful clients take the following approaches: They’re Adjusting Expectations — Not Sitting Still No one’s expecting 15% year-over-year gains anymore. But smart investors don’t need a bull market to make money — they need good fundamentals. They’re buying properties with positive cash flow They’re building equity through rehab and repositioning They’re evaluating deals conservatively — with real-world rent and interest rate assumptions They’re Leaning Into Data, Not Headlines While media narratives often focus on “cooling” or “correction,” experienced investors look closer. Redfin reports that 44% of home sellers offered concessions to buyers in Q1 2025 — a strong indicator that it’s becoming a buyer’s market. They’re watching: Inventory trends in local markets Rent vs. price ratios Economic growth and employment in target metros They’re Using Flexible Financing With interest rates fluctuating, finding flexible financing structures matter now more than ever. Many are: Using interest-only loans for fix and flips Structuring Fix to Rent (BRRRR) strategies allowing them to capture equity now and refinance later into a long-term hold. Locking in rates now, with plans to refinance if/when rates fall Common Misconceptions About Instability Let’s debunk a few myths: Prices are about to crash. No major forecast shows a crash. Even Redfin — one of the more conservative analysts — only projects a ~1% price dip by end of 2025. There are no good deals. Actually, we’re seeing more negotiable deals than in the last 3 years — especially for value-add projects or properties with cosmetic issues. It’s better to wait. Maybe — but not always. Waiting means: Paying rent or missing rental income Competing with more buyers later if rates drop Missing out on unique deals available now Real Talk: What We’d Tell a Cautious Investor If you’re holding back because the market feels uncertain, we get it. It’s smart to be cautious. But here’s what we’ve seen after working with thousands of investors: “Uncertainty often leads to opportunity. The best deals aren’t found when everyone’s feeling confident — they’re made when others hesitate.” 2025 isn’t perfect. But you don’t need perfect conditions to make money in real estate. You need: Realistic expectations A clear plan The right partners (on the ground and on the financing side) What Can You Do Today? Not ready to buy tomorrow? That’s fine. But you can still prepare: Run the numbers on a few sample deals at today’s rates Talk to local brokers about inventory Speak to a LendingOne loan advisor about flexible loan options Identify 2–3 target markets and start tracking DOM, pricing and rental comps Final Thought: Controlled Uncertainty Is Your Friend The investors who will win in 2025 aren’t the ones waiting for the dust to settle. They’re the ones who can see through the fog — and move forward with a plan. If you want help making sense of the market or need a second set of eyes on a deal, our team is here to help. LendingOne works with thousands of real estate investors across the country and knows how to lend — and lend smart — in any market. Talk to a LendingOne Advisor today about opportunities in your market. We’ll help you assess risk, run projections and build a financing plan for this environment.

At LendingOne, we work with real estate investors every day—from early-stage investors  to seasoned pros with large portfolios. In 2025, investors are navigating a different environment than the boom years of the early 2020s. With economic signals mixed and uncertainty in the air, it’s no surprise that investors are asking smart, cautious questions before making their next move. The good news? Many of these questions can be addressed with the right strategy, supporting data, and flexible financing. Below, we break down the five most common themes we’re hearing—and how today’s market shifts can be turned into opportunities. Question 1: Is the Market Too Unstable to Invest Right Now? Answer:  The market looks different than it did during the surge of 2021 and 2022. Volatility has replaced predictability—but that doesn’t mean it’s time to sit on the sidelines. In fact, volatility often creates opportunity. According to the National Association of REALTORS® (NAR), pending home sales began to recover in early 2025, with existing-home sales projected to rise nearly 9% this year. This rebound signals renewed confidence from buyers and sellers. And while home price growth has slowed, it hasn’t reversed. Redfin reports that U.S. home prices are up ~1% year-over-year as of April 2025. That’s a sign of stability, not collapse. For savvy investors, a transitional market often means better deals. With fewer buyers competing, there's more room to negotiate and more power at the table. In fact, nearly 45% of home sellers in Q1 2025 offered concessions like closing cost assistance or rate buydowns. Opportunity: Investors who act strategically while others hesitate can access better pricing, less competition, and improved deal terms.  See how investors are protecting themselves from broader economic shifts. [Read the full article on economic fears and real estate →] Question 2: Can Real Estate Still Protect Me from Economic Uncertainty? Answer: It’s true that tariffs and global economic uncertainty have increased material costs and investor caution. For example, the National Association of Home Builders estimates that recent tariffs have added around $9,200 to the cost of a new home. But here’s the bigger picture: real estate is historically one of the strongest hedges against volatility. Unlike equities or crypto, real estate is a tangible, income-producing asset that you can control. You decide how it’s financed, how it’s improved, and when it’s sold. More importantly, today’s housing fundamentals are far stronger than they were in 2008. According to ATTOM, 47% of U.S. mortgage holders are now “equity rich,” and just 2.5% are underwater. That gives the market a cushion and reduces systemic risk. Opportunity: In uncertain times, real estate allows for strategic, controllable investing—especially when paired with conservative underwriting and flexible loan options. Want to know how experienced investors navigate volatility? [Read our full breakdown of market stability concerns →] Question 3: Should I Wait for Prices to Drop Before I Buy?  Answer: Many investors are wondering if prices will drop further—and whether it’s smarter to wait. But most indicators point to a plateau, not a plunge. NAR forecasts home prices to rise around 2% in 2025, while Redfin expects a modest 1% national decline. Meanwhile, Freddie Mac estimates the U.S. remains short 4.5 million housing units, meaning supply-side pressure is still driving long-term demand. Trying to time the market perfectly is difficult—often impossible. And while you wait, you could miss out on cash flow, appreciation, or favorable inventory. Opportunity: If the numbers work today—even with current prices—it’s worth moving. Investors who act based on cash flow and long-term goals, not predictions, tend to outperform those who sit on the sidelines. Here’s why trying to time the market rarely pays off. [Explore our take on price timing and investor strategy →] Question 4: Are Interest Rates Too High to Make a Deal Work? Answer: While rates are higher than a few years ago, most experts predict we’ll see rates drop later in 2025, potentially opening the door for refinancing. As of May 2025, the average 30-year fixed mortgage sits around 6.7%. But that’s not historically extreme. In fact, the 50-year average is 7.7%. In the meantime, smart investors are finding ways to make deals work at today’s rates. One reason: seller flexibility. Nearly 44% of sellers are offering concessions like rate buydowns or closing cost credits, giving buyers more room to improve loan terms. Our clients are also leveraging: Fast closings to help compete and win deals  No income verification for a smoother approval process  Flexible terms tailored to each investment strategy  High leverage options to help with scalability Opportunity: Rather than waiting for rates to drop, focus on building deals that cash flow now—with financing that adapts to your strategy. Rates are just one piece of the puzzle. Learn how investors are making deals pencil anyway. [Read more about investing with high interest rates →] Question 5: Does a Market Correction Mean I Should Wait? Answer: Some investors are concerned about “market corrections”—but not all pullbacks are bad. After years of record growth, stabilization is a natural and necessary adjustment. Consider this: the median U.S. home price rose over 40% between 2015 and 2024. A minor 5% pullback in overheated metros isn’t a crash—it’s normalization. Experts see the current shift as healthy for the market. A slower pace of growth: Reduces speculation Gives buyers more negotiating power Encourages long-term thinking We’re seeing prepared investors step in while others wait, acquiring strong assets at prices below peak levels and using long-term financing to hold or reposition them. Opportunity: A cooler market isn’t a warning—it’s an opening to invest with discipline, structure, and a focus on sustainability. Not all corrections are red flags. See why normalization could work in your favor. [Read more about market corrections and what they mean for investors →] Conclusion: Opportunity in Every Market Today’s market isn’t without challenges—but it’s far from uninvestable. In fact, our experienced clients see this environment as ideal: more motivated sellers, less competition, and plenty of ways to structure a deal that works. Every question above is valid. But when you dig deeper, the data shows a market that’s correcting—not collapsing—and a lending landscape built to support investors who think long term. At LendingOne, we’re here to help you evaluate the landscape, structure financing around your goals, and move forward with clarity and confidence.