Grant Cardone Predicts ‘Epic’ Real Estate Correction

Aja McClanahan
GC Russia / Wikimedia Commons
GC Russia / Wikimedia Commons

Grant Cardone, the charismatic real estate guru, social media influencer and private equity fund manager, has said that the United States real estate market is set for a significant correction. The real estate investor used bold language to certify his beliefs, saying, “We’re entering the greatest real estate correction in my lifetime.”

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Factors Influencing Real Estate Market Conditions

Many factors can impact real estate markets, from supply and demand to interest rates to economic instability. High interest rates are one of the primary factors suppressing demand at this point. In this environment, we are seeing some price reductions for homes, though it varies by region.

Per the National Association of Realtors, the single-family home market remains strong, with the median prices for existing home sales steadily on the rise since 2020:

Year

Median Price

2020

$300,320

2021

$357,100

2022

$392,800

The Pandemic Effect

The past few years have represented one of the most bizarre real estate markets that investors and homeowners have seen in a long time. It started with the pandemic, which changed how Americans work and live.

Some speculate that the pandemic economic packages put loads of cash in the hands of Americans through various financial aid programs, including stimulus checks, Protection Program (PPP) loans and the Economic Injury and Disaster Loan (EIDL) program. When this money was funneled into the real estate market, prices increased, especially in residential markets. However, Cardone doesn’t think that this correction will affect single-family homes as much.

Additionally, the option to work from home meant that people were no longer tethered to physical offices, prompting many to relocate based on preference rather than employment situation. This massive relocation further increased prices in high-demand places like Texas, Arizona and Florida.

Once the initial concern of traveling during the pandemic was over, a boon in Airbnb booking trickled into residential real estate, urging more people to buy investment property and tap into the emerging trend of hosting for extra cash.

In a 2021 report, Airbnb claims that new furnished rental hosts earned $1 billion during the pandemic. Top earnings came from hosts in Los Angeles, the Smoky Mountains and Atlanta, further spurring home price increases.

Is Commercial Real Estate at Risk?

With all these factors at play, the return to offices hasn’t been as robust as anticipated. The recent bankruptcy filing of WeWork, a company that owned and leased co-working spaces, could be an omen of things to come in the commercial real estate space.

A 2023 Global Management consulting firm McKinsey report analyzed the demand for post-pandemic office space: “In most superstar cities, lower office attendance has similarly driven down asking rents in real terms.”  The report revealed that, “Rent prices in New York City fell by 18% from 2019 to 2022. San Francisco saw a whopping 28% decrease during the same time frame.”

Other Experts Weigh In

Glenn S. Phillips, Lead Economic Analyst of Lake Homes Realty & Beach Homes Realty, operates real estate brokerages in 34 states. He said, “Our data and market analysis tell us that single-family residential real estate will remain strong, and prices will hold steady or increase slightly in 2024.” He added, “Other sectors, however, have some serious issues that will, sooner or later, correct themselves (as they always do).”

Other real estate investors agreed with Cardone’s assessment that we are approaching “a great opportunity for individuals, regular, everyday people to actually grab trophy real estate from institutions.”

Steve Davis, CEO of Total Wealth Academy, helps people increase their net worth with passive real estate investment. He said, “I happen to agree with Cardone on this one. We are already seeing dramatic price drops from sophisticated sellers who recognize that the higher interest rates make their property worth less to credible buyers.”

Davis’ real estate investments have already benefited from the predicted correction. “We have picked up three apartment complexes well below their appraised values in just the last three months.”

How Can You Prepare for This Real Estate Correction?

As the old adage goes, cash is king. If you want to get valuable real estate at fire sale prices, your first order of business would be to accumulate enough cash to do so. In essence, simply increase your savings and have enough cash to play ball when the time is right.

The most likely assets to take a hit will be commercial properties like office space buildings and multifamily apartment complexes. You might think you probably won’t have enough cash to buy real estate in these price ranges, but don’t count yourself out too soon.

You may be able to invest in these distressed or price-reduced assets in various ways, including:

  • Buying smaller multifamily or strip mall properties;

  • Forming a partnership or LLC to invest in real estate;

  • Investing in a real estate syndicate (an investment group).

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If Grant Cardone is right, by investing in the above, you could be setting yourself up for massive wealth-building opportunities in the years to come.

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