Will The Housing Market Crash? What Are Financial Experts Saying?
by Ankita Tripathy Real Estate 29 March 2023
Believe it or not there are a number of people who have been searching for the answer to when will the Housing market crash.
Are you searching for the same? If your answer is yes, then you have reached the right place.
There have been a lot of ups and downs in the mortgage rates recently in the past. This is one of the reasons why a lot of people in the industry are predicting that the housing market is going to crash sooner or later.
If you are searching for the same and are going through the predictions, you have reached the right place. Keep reading this article till the end to learn more about the same…
Housing Market Crash: Everything You Need To Know!
According to studies and predictions published by several sources, it has been said that the mortgage rates have continued to drop this week. “Home sales prices fell year-over-year in February—the first time in nearly 11 years—and total home sales saw their largest monthly percentage increase since July 2020,” reports state.
While the real estate market on a public scale has seen costs decline since the middle of 2022 in the midst of exorbitant loan fees, specialists are taking note that an unexpected and sudden real estate market slump is far-fetched, in light of current economic situations.
This brings us to the question, “is there a chance of an impending housing bubble?”
Keep reading this article till the end to learn the answer…
Is There A Chance Of A Housing Bubble?
As I have already mentioned, the fluctuations of the mortgage rates is one often reason why people are predicting a housing bubble. In case you do not understand the meaning of the term housing bubble, let me tell you.
According to the definitions in the world of markets, a bubble is when the price of stocks or other assets rises quickly without being justified by the fundamentals and then falls quickly once investors lose interest.
Investor psychology and sentiment are major contributors to bubbles, which result in a positive feedback loop of rising prices and additional sales. More and more investors see the price increase of a stock or other asset as an opportunity to profit. As the bubble expands, additional buying pushes prices even higher, attracting additional investors.
Rapid growth of the market value accurately describes the condition of the housing market up until about midway through 2022, given the rapid pace of the market that has lasted roughly the duration of the COVID-19 pandemic. There has been a rise in the price of homes and houses. According to the US News, “Home price growth was in the double digits year over year every month from August 2020 thru mid-July 2022, based on home sale price data from Redfin.”
Will The Housing Market Crash: What Do Experts Say?
While there is a visible fluctuation in the market, experts have given mixed statements about the entire condition. Economists have not yet clearly spoken about how much more will the home prices drop in 2023.
According to an article published in Forbes, it has been said that homebuyers who took advantage of record-low interest rates in recent years are staying put. Prices aren’t dropping as much as they could because of tight inventory, which is making it harder for many people, especially first-time homebuyers, to afford a home.
Housing economists have agreed that the prices could fall even further, but not as much as they did for homeowners during the Great Recession. The personal balance sheets of homeowners are significantly stronger today than they were 15 years ago, which is one obvious difference between now and then.
A fixed-rate mortgage with a rate well below 5% is typical for the typical homeowner with a mortgage. They also have a lot of equity in their home. Therefore, there is no imminent foreclosure crisis.
Reasons Why Housing Market Will Not Crash!
There are a number of reasons why the Housing market might not crash right now. Some of the reason for that are as follows:
1. There Are Not Enough Supply To Meet The Demands Yet
After the most recent crash, homebuilders slowed dramatically, but they never fully returned to pre-2007 levels. They are currently unable to purchase land or obtain regulatory approvals quickly enough to satisfy demand. While they are building as much as they can, it seems unlikely that they will build too much again. According to Bankrate’s chief financial analyst, Greg McBride, CFA, “increased demand and a lack of supply are the primary reasons for the rise in price.”
2. New Buyers Are There
There is a lot of strong demand for houses. During the pandemic, many Americans who already owned homes decided they needed bigger places, especially as the number of people working from home increased. The generation of millennials is huge and in the buying stage. Additionally, Hispanics are a young, expanding demographic that is eager to own a home.
3. Low Inventories
In January, there was a 2.9-month supply of homes for sale, according to the National Association of Realtors. That number was as low as a minuscule 2.0-month supply in February 2022. Many buyers continue to be forced to bid higher prices due to the ongoing lack of inventory. Additionally, it suggests that the supply-demand equation will not permit a price collapse anytime soon.
Wrapping It Up!
In case you were searching for the answer to whether the Housing Market crash will happen or not, I hope that this article has been of help to you. If there are any other queries related to the same, feel free to let me know. All that you need to do is scroll down till you reach the bottom of the page. Then leave your series in the comment box below. And I will be there to answer them all for you.
Read Also:
Tags:
Related
