The Best Real Estate Crash Of 2022
A series of stories ask housing experts for their forecasts for the next five years, how investors are impacting the market, and whether state or federal intervention is needed. TA’s double-digit increase in the national median listing price of $341,600 in April indicates the housing market is not slowing down. Despite April’s 19.1% rise in mortgage rates, buyers aren’t backing down. There are more signs that the housing market is on a fast-paced upward trajectory.? In the near future, will the real estate crash or at least deflate? Over the next five years, Forbes Advisor asked nearly a dozen housing experts for their forecasts. There are some warning signs that home prices could falter amid rising inflation and geopolitical uncertainty, although most experts expect homebuyer demand to continue.
What are the chances of a housing bubble forming?
Earlier this month, the Federal Reserve Bank of Dallas identified signs of a “brewing U.S. housing bubble” in a blog post. Despite the sharp increase in home prices, the report said, there are other fundamental factors to consider, including “shifts in disposable income, the cost of credit, disruptions in supply, and rising labor and raw construction material costs are among the economic reasons for sustained real house-price gains.” The housing market is unhinged when “there is a widespread belief that today’s robust price increases will persist,” the Dallas Fed report said. It is possible for a ‘fear of missing out to drive up prices and raise expectations of strong gains in housing prices if many buyers share this belief.
Home prices are likely to remain high for some time to come
If you were hoping to get a cheaper home by waiting for a major downturn, think again. For several reasons, most housing experts expect the market to remain strong for some time.
Generation Z is right behind millennials in housing demand
In July 2019, 166 million Americans, half of whom are Millennials or younger, were eligible to buy a home. National Association of Realtors (NAR) data shows that first-time homebuyers account for the largest share of home purchases (31%) Most first-time homebuyers are younger than 40, thus indicating a strong demand for homes, especially since housing inventory is low.
Demand outpaces supply
As a result of the severely low supply, demand is also fueling higher home prices, which is another reason housing experts say the market will remain strong for years.
Rick Sharga, executive vice president at RealtyTrac, says that home prices have risen rapidly because of the supply-demand imbalance. It will take homebuilders several years to add enough new supply to balance the market after not building enough houses for the last decade.”
Assuming the current sales pace continues, there would be six months of supply in a balanced market. However, the current market has only 1.7 months’ supply, indicating a drastic imbalance in sellers’ favor.
The likelihood of borrowers defaulting on their mortgages is lower
The difference between today’s housing market and the 2008 housing real estate crash is that lending standards are tighter as a result of lessons learned and new regulations implemented after the last real estate crash. As a result, mortgages approved nowadays are less likely to default than those approved before the financial crisis.
Unlike before the housing real estate crash, it is rare to find a lender that offers so-called “no-doc loans” without documentation of income. In addition, many government-backed loans have certain requirements, such as a minimum credit score and a down payment. In addition, lenders are now expected to verify the borrower’s ability to repay a loan.