The US residential real estate market is certainly not in ‘crash’ mode – at least not yet.
Still, home buyers and sellers are checking the health of the domestic housing market online. In doing so, digital users may be fueling the flames of a housing market crash simply by making the term “housing crash” a household term on the internet these days.
As always, the data speaks for itself.
According to a new study by a luxury brokerage firm ruby homeInternet Search Interest for ‘Housing Collapse’ Soars At 177% since August 2021, it hit the highest record for the period since Google Trends began reporting in 2004.
“The surge in searches for home crashes indicates that homeowners, especially those looking to sell, are becoming increasingly nervous about market timing,” said a RubyHome report. increase. “If interest rates continue to rise, purchasing power will continue to decline, putting further downward pressure on house prices until they are on par with what people can afford.”
“Put another way, sellers will eventually have to surrender,” the report added.
Decline, “Yes”… Crash, “No”
There is no doubt that the US real estate market has experienced a surge in prices over the past two years. But a housing crash? Not so, experts say.
“The 2008 housing crisis taught us what a real housing collapse looks like,” said Joshua Massiehm, chief executive of Pacwest Funding and Real Estate in San Diego. “Based on that period in history, current property market conditions are stable and more stable.”
According to Massiehm, the property market should see just a 5% correction from the peak of house prices in late 2021 and early 2022, but not a 30% drop in prices. “I think the price will be stable for a while,” he told TheStreet. “Basically, we’re back to a normal housing market with interest rates staying in a realistic range and home prices rising more slowly than they have in the last two years.”
Other housing experts say buying activity has slowed as builders take things slow.
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“The U.S. housing market is largely stable,” said Carol Horton, chief marketing officer at the Texas-based homebuilder. Kindred Homes“Buyers are backing off, but there is still a lot of demand for housing. Diversifying their offerings helps builders balance their revenue streams.”
However, builders are delaying permits/starts to offset slowing demand. “Builders are building a record number of homes right now,” Horton said.
Houghton also does not foresee imminent “housing collapse.”
“Prices are facing a market correction, not a collapse,” Horton told TheStreet.com. “We now have record levels of wealth by homeowners, which weren’t there during the 2008 crash. Plus, we have record levels of low vacancy, which means vacant homes are available. 2009 had record high vacancy rates.”
One problem that can be overcome is that many buyers are canceling contracts in a panic over rising interest rates.
“But interest rates are still historically very low,” Houghton added. “These rates should normalize and buyers will definitely return to the table. Their purchasing power may decline, but demand for homes is still very strong.”
tips for buyers
In a property market that seems imbalanced, buyers may easily get upset. But he does have one area of potential.
“Now is the perfect time to buy a new building,” Horton says. “If you plan to stay in the place or home for at least five to seven years, it makes sense to buy a mortgage and deduct your taxes. We are giving away large sums of money to help pay for mortgages that will help lower interest rates to qualify for more money.”
In addition, many builders are in negotiations.
“Now is the perfect time to ask builders to throw in upgraded lighting fixtures, appliances, and more to complete the deal,” Houghton added.
If you already have a contract with a builder but a rate increase would make your home more expensive, ask the builder to lower your interest rate or discount your price.
“A lot of builders would rather discount the house than lose the contract outright,” she told TheStreet.