Is the housing market going to crash
What if I told you that the housing market was going to crash? Would you believe me? Well, maybe it’s time to stop procrastinating on buying a new home and trust the numbers! In today’s blog post, I will show you all the indicators that point to an upcoming housing market crash. But, first, let’s talk about why housing prices rise so much in major cities like Chicago and New York City.
Experts say price appreciation is ‘worrisome.’
Experts say price appreciation is worrisome. According to CoreLogic’s Home Price Index, the latest data shows that home prices in metro areas rose by 8.2% in October. That’s the most significant year-over-year increase since February 2006 and a significant acceleration from September’s 6% gain.
The surge in price growth is problematic because it implies builders and buyers are rushing into markets with limited inventory, wrote Ralph McLaughlin, chief economist at CoreLogic.
It’s All About Perspective
The housing market is going through a difficult time, but it’s hard to say if it will crash. This is because so many factors contribute to the health of the real estate industry, and there has been speculation about how these factors may impact one another.
The first factor is interest rates. When interest rates drop, people with money to invest, like pension funds or hedge funds, buy up properties because they can get more for their investment dollars than they could at higher rates. This drives up demand and pushes up prices. Conversely, when interest rates go back up, investors often sell their properties which can cause prices to plummet.
The second major factor is unemployment.
3 Signs the Housing Market is Heading for a Crash
The housing market is a huge indicator of where our Economy is headed. Home sales, home prices, and foreclosures are all factors that signal whether we’re in for a recession or not.
- Home Sales – Purchasing a home requires a lot of money, and if people spend less on homes, then they’re also spending less on other things. This will lead to fewer jobs, leading to a decrease in GDP.
- Home Prices – The housing bubble burst in 2008 because of irresponsible lending practices by banks handing out mortgages like candy. If this happens again, it could significantly change how banks handle mortgage lending. The government may step in to limit the number of loans that banks can issue and require more information before approving mortgages. In addition, there might be tighter restrictions around qualifying income requirements, maximum debt-to-income ratios, and minimum down payments. These measures would help prevent another housing bubble from forming but might make it more difficult for homeowners with good credit scores who don’t have ample savings accounts or significant incomes to qualify for a loan.
- Foreclosures – One of the leading causes behind the 2007 housing collapse was too many people walking away from their homes after they couldn’t afford them anymore due to job loss, medical emergencies, divorce, etc. Unfortunately, foreclosure rates are starting to creep up again with no signs of slowing down anytime soon.
5 Reasons the Housing Market is Heading for a Crash
- The Demand for New Homes is Lower Than it has Been in a Decade
- The Inventory of Homes is Higher Than it Has Been in a Decade
- Home Prices are Rising Faster than Income Levels.
4. Mortgage Interest Rates Are at Historic Lows.
5. There Will Be Massive Defaults on Mortgages and Foreclosures
- 6. The Economy May be Heading Towards Recession. If so, People may not be Able to Afford Homes. If there are Fewer Buyers, then Houses will Stay Unsold. In this scenario, Banks Won’t Be Getting Their Money Back From these Unsold Houses; They’ll Have no Choice but to Offer Lower Loan Terms or Stop Making Loans altogether (or Both). So we Can Expect Bankruptcies, foreclosures, job losses, and a Huge Drop in Property Values that may never Recover.