Is the Housing Market Going to Crash? 5 Experts Weigh In.

  • Economists are at odds over the likelihood of a housing recession.
  • Some believe it’s only a matter of time before home prices take a long-awaited dive.
  • Others argue the limited supply of homes in the U.S. prevent any sort of catastrophic pullback.
housing market crash - Is the Housing Market Going to Crash? 5 Experts Weigh In.

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The notion of a housing market crash has been a point of contention between economists for most of the year. Some argue there are too many barriers to a steep fall in price to merit any legitimate bubble fears. Others believe we’re already in the midst of a housing recession. The current state of housing in the U.S. has left many would-be homebuyers with plenty of questions and limited answers.

The major barrier to a steep housing pullback is the limited supply of homes in the U.S. The simple fact is that there is still low inventory of available homes for sale in the country. Even as demand for housing has taken a nosedive in response to inflation, mortgage rates are on the rise and recession fears continue to mount, on a large scale, home prices won’t recede substantially if there aren’t enough properties on the market.

While the previously mentioned phenomena have served to lower the demand for homes, rebalancing the topsy-turvy industry to some regard, it has also discouraged some to put their homes up for sale to begin with. Many homeowners are soaking up unprecedented amounts of equity via low-interest mortgage payments leading back to the start of the pandemic. As such, they have no immediate need to list their homes in a cooling housing market. It makes more sense to wait for things to heat back up and reap the profits in the long term.

With that said, in some places, housing has already experienced fairly substantial price declines. Housing has risen ceaselessly over the past few years, and according to some economists, it is primed for a “gotcha” moment. Let’s see what the experts think.

5 Experts Weigh In on a Potential Housing Market Crash

Nadia Evangelou, a senior economist at the National Association of Realtors (NAR), believes housing is limited in its falling power.

“Due to the housing shortage, home prices will continue to rise in the following months. Although inventory is improving, it will remain tight as home builders have cut down on single-family home production. There will be continuing home price deceleration. Nevertheless, home prices will likely continue to experience double-digit year-over-year appreciation in August.”

On the other hand, José Torres, a senior economist at Interactive Brokers, made a case on the contrary in a recent Business Insider interview.

“At this point, housing is unreachable when considering household incomes and individual incomes. The percentage of the average monthly payment to household incomes and individual incomes is at record highs — similar to levels that we saw during the 2008 financial crisis. … We’re going to see something very similar to what we saw during the Great Financial Crisis.”

Chris Low, chief economist at FHN Financial, also believes a housing recession is a strong possibility.

“Housing is a leading indicator of the broad economy. … I would say housing is in a recession, and that likely means the rest of the economy will be in a recession soon.”

According to Holden Lewis, a NerdWallet analyst, parallels to the 2008 housing crash are fruitless.

“Builders haven’t overbuilt, and lenders have strict lending standards. … Put those trends together, and you have a housing market that’s unlikely to crash anytime soon.”

Finally, Mark Zandi, chief economist at Moody’s Analytics, believes mortgage rates are the major determining factor for a housing market.

“If we stay around six [percent 30-year fixed mortgage rate] I think that the market will adjust and we’ll eventually get that correction. If it goes much higher than that we’ll get a more significant pullback in the housing market.”

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

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