After a loooooooooooong upward march in housing prices to inflated levels, it appears the bubble is finally bursting. - Fed raises rates / banks raise mortgage interest rates - Unsustainable boom in housing prices is at an end - Housing too expensive based on median incomes--people can't afford these price levels - Outside investors and flippers, like Blackrock and Chinese investors, pumped the market too high Probably, the best we can hope for is a slight to medium correction, followed by relatively flat prices for a long time. 'This might be a housing bubble,' says Dallas Fed economist—here's an exclusive look at the latest housing market analysis Fortune teamed up with Home.LLC to identify the housing markets that would sink the furthest if a housing crash comes along. The odds of home prices correcting spiked over the past month Real estate crash – which markets will survive?
So did my daughter and son in law to a Cal couple who bought for daughter. Now said daughter is renting it out at an obscene rate.
There will be no crash. The quantity demanded is still way to strong relative to quantity supplied and that isn't about to change anytime soon due to the shortage of labor and resources.
The supply of people who can afford the housing prices dwindles every time there is an interest rate hike along with overall inflation. I agree it won’t “crash” but there will undoubtably be a correction.
This is my viewpoint as well. The prices have been inflated due to years of ridiculously low interest rates. I am already starting to see a softening in several of the red hot Houston suburbs. Getting daily "price drop" notifications.
Home affordability has 'collapsed' in 2022, and this is what to expect next, according to Bank of America [Very low housing inventory is the contra-factor (somebody rightfully called this above). Still, most gurus are expecting a noticeable level of housing price correction... Low housing supply or not, it's just too expensive for many buyers based on their incomes, and interest rates are heading up... Also, expect banks to start getting stingier with their lending practices...] Existing home sales tumbled 33% in the wake of the 1987 crash and 45% in the aftermath of the subprime mortgage debacle. “In this cycle, we think a 35% peak-to-trough existing-home-sales decline is plausible,” Flanagan’s team wrote, in a weekly client note. ... However, even in a somewhat “draconian” scenario, where the demand side for housing “is meaningfully altered by reduced affordability, the supply side remains exceptionally supportive” for home price appreciation, Flanagan’s team wrote. Why? Blame the subprime mortgage mess and decades of underbuilding. Those catalysts led to record low supply of existing homes (see chart), which will take time to “normalize.”
At the current build rate there will be enough apartment units for anyone that cannot afford a house, hmmm just thinking there will be plenty of room for those 1,000’s of aliens coming. How about that?
My realtor in Nashville says she already sees a slowdown. My buyer paid $150,000 over a list price I thought was too high. She is not seeing as much bidding wars right now.
I think this will be pretty regional in impact. Texas (Austin, Dallas, Houston) will probably go back to 2-4% appreciation per year. Mostly because the job prospects are still strong in those areas. Places that people were moving to counting on a "full remote work" future will take the biggest hit. Ultimately i think businesses will win the majority of the tug-of-war about remote vs/ office work. Most businesses will still require at least 2 days a week in-office. and if that is the case then employees are still mostly tied to the physical location of the office, and if that is the case, then traditional work centers will be relatively safe from a down turn. All that "live on the beach" and "live in the country" stuff will probably see a decent downturn though.
We all knew that the market was going to correct. I read that the housing inventory is still not out of whack like it was before. So, there may be some correction but not a long, sustained dip. They're still market + here.
Many, many negative factors are converging. 1. Higher interest rates make houses less affordable and harder for people to qualify. ARMs can allow buyers in at lower rates, but this is a huge risk should rates not fall. 2. As asset bubbles burst in the stock market, people have less paper wealth and will be less able to draw on investment funds to use on houses. 3. Supply chain disruptions will continue to put pressure on prices of goods meaning inflation will stay high. 4. Insane energy policies and stupid sanctions will keep gas prices high which will translate into inflation in food and goods. 5. High input costs and higher borrowing costs mean unemployment will uptick. So we will see deflation at the same time as the prices of many goods inflate. In short, America is screwed.
People in the market are panicking. This is an old fashioned type of recession (boom/bust) that typically last 6-9 months.
As long as 100,000 people a year keep moving to the Austin area and businesses like Samsung and Apple keep building the mega facilities housing will continue to skyrocket. People will pay anything for a house if they have the money.
A housing crash is unlikely, but a correction could be around the corner. Here's the difference. The housing bubble that led up to the 2008 crisis is attributed to a combination of cheap debt, predatory lending practices, and complex financial engineering that resulted in many borrowers being placed into mortgages they could not afford. The situation triggered a foreclosure crisis among homeowners and a credit crisis among the investors who owned bonds backed by defaulted mortgages and birthed a global recession. In 2022, the real estate market is in a much better position. Almost all American households have rebuilt their nominal net worth to pre-recession values and lending standards have tightened while home values have soared. However, despite the market's improvement, there still remains a great imbalance between supply and demand. But as buyer demand declines amid soaring costs, it's easing competition — and that could mean a correction rather than a crash is on the way.
The U.S. Housing Market Has Peaked "But no, we’re not headed for anything even close to 2008. Finally, we can already see these technical statistics—rates, percents, inventory—playing out in the real world. Google searches for homes for sale are falling in major cities, including Boston and Los Angeles. Redfin agents in California say that showings and offers are down double digits since last year. In Minneapolis, showings have fallen rapidly in just the past month. May and June are historically the most popular months to buy a home. That means that the housing slowdown might be delayed for a few weeks, as the spring surge works its way through the system. But by this summer, sellers expecting dozens of offers in a matter of days could be in for a rude awakening."
