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Is the Housing Market Going to Crash?

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Even if S & P 500 Inflation hit a decade-long high in the bear market territory, but the housing market is still hot. Indeed, despite market conditions, home prices did not appear to be affected.Now, some argue that real estate is a little done that too Hot and similar to 2008. Everyone wonders if the housing market will collapse.

Well, experts seem to think that the answer is mostly “no”. This does not mean that there is no problem or that there is no deceleration ahead.

Most people agree that the current pace of home prices is unsustainable. House prices continue to rise even after the Federal Reserve raised rates by 50 basis points for the first two times.according to US National Home Price IndexFrom January to March of this year, average housing costs increased by more than 4%. House prices have risen by about 20% since last year, centering on record highs.

Interestingly, home prices are rising, despite the rapid rise in mortgage rates. The 30-year fixed mortgage rate is currently around 6.3%, the highest since 2008. This, along with the volume of mortgage applications, has a cyclical impact on mortgage demand. Approximately 50% decrease from the previous year.. However, despite lower demand and rising interest rates, house prices have not yet eased.

Hope for a spark to raise interest rates in the air-conditioned housing market

Some believe that raising the Fed’s 75 basis points could be just the contractile force needed to slow the rise in home prices. However, most people do not expect real estate prices to actually fall. Rather, higher rates may slow or stop the accelerating rise.The simple fact is that the United States Not enough houses To meet even today’s declining demand. This makes it difficult to really keep home prices down, even though mortgage rates are rising.

One of the economic consequences that can lead to lower home prices is a recession.Recently, the following specialists are increasing. Morgan Stanley (NYSE:MS) CEO James Gorman, Expectations for recession In the United States

Will the housing market collapse?

The collapse of the housing market is another story.Many people compare 2007 and 2008, but the modern housing market is Another beast.. Most analysts agree that a crash is unlikely, especially given the lending standards that mortgage brokers are currently tightening. By 2022, mortgage debt will be high, mortgage holders will not be immediately exposed to the risk of default, and homes will not be significantly overvalued.

Many economists expect the housing market to ease moderately as borrowing rates continue to rise. Most home sales declined this year due to declining demand. Sales may continue to decline as interest rates rise and demand better aligns with domestic housing supply.

Fannie Mae’s chief economist, Doug Duncan, foresaw a soft landing in the housing market.

“Mortgage rates have risen dramatically in the past few months, and historically such a major move has ended with a slowdown in homes. As a result, home sales, home prices and mortgage volumes have risen. , I expect it to cool down in the next two years. “

At the date of publication, Shrey Dua did not hold (directly or indirectly) the position of the securities described in this article. The opinions expressed in this article are those of the authors covered by InvestorPlace.com. Public guidelines..

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