Many people believe that housing market crashes are more common than they are. However, if a crash occurs, you can rest easy knowing these three things. Aside from the Great Recession, the last major housing crash occurred during World War II in the 1930s and 1940s.
When will The Housing Market Crash
As market starts to fade, the housing market may slow significantly, prompting some analysts and observers to predict a bubble burst or even a market crash.
Moody’s Analytics chief economist Mark Zandi told a bipartisan housing policy summit in Washington, D.C. this week that he expects a nationwide correction from “coast to coast.”
Home buyers have flocked to the market in recent years, drawn in by low mortgage rates during the pandemic. Prices skyrocketed as buyers competed for a limited number of available homes as the market and new-home construction recovered from the global financial crisis.
Crashing is far less common than many people believe, but the recent scar of the Great Recession has many worried that we are in a housing bubble after several years of record price growth.
In early June, approximately 5.8 percent of US households were behind on their mortgage or rent. This rate has dropped from 6.2 percent to around 0.4 percent since this time last year.
The federal government has tracked an 18% increase in housing prices over the last year. This is the market’s fastest price increase since 1991. Housing prices increased by about 10% per year between 2004 and 2006.
None, however, see a housing market collapse on the horizon. When compared to 2006-2008, market conditions are being driven by very different factors.
What is causing the housing market to be volatile?
The price increases are the result of rising inflation across markets. Rent prices have risen 10% since last June, but the rate has fallen 0.6 percent in April.
Rental prices in Florida have risen the most, with renters in Palm Beach, Miami, Fort Lauderdale, Orlando, and Tampa paying more than 15% more than this time last year.
According to the US Census, 34% of households expect to be evicted within the next month. However, if rent price growth slows further, these levels of housing insecurity may fall later in 2022.
Recent price increases are partly the result of the Federal Reserve raising interest rates. Chairmen Jerome Powell announced a 0.75 percent increase earlier this month and stated that the public and investors should expect further increases in base points in the coming months.
Rate increases will make loans more expensive, and firms may become less focused on growth and scale back operations by laying off employees.
The Federal Reserve has attempted to alleviate public concern about a possible recession by announcing that large banks are well-positioned to continue lending to businesses and households.