Is the housing market about to crash?

[bjl584]

Is the housing market about to crash? What the experts are saying (yahoo.com)

[kork13]

Persistently low available inventory is driving alot of the market forces right now, and doesn't seem to be much change to that fact waiting in the wings.

Another factor not directly considered in the article is the fact that urban areas are draining, with folks rushing to less crowded cities, suburbs, and even rural areas. This is probably helped along by the greater availability of remote work.

An easing off of the gas may be coming (if not likely), but for now, a crash doesn't look probable ... Especially nothing like the 2008-era RE crash.

[ua_guy]

I agree conditions are very different compared to 2008. We should be seeing crashing prices, but that effect is tempered by the inventory constraint caused by people sheltering in place and refusing to move because of high rates. Despite our locale being a very expensive area to live, it remains very popular. The job market is also holding strong and people continue to pay on their homes. So, at least locally, we're seeing a lot of insulation from other market conditions.

The exodus from urban areas is overstated, IMO. It's actually a very low percentage of people, but it is non-ignorable and tends to follow the availability of remote work and cheaper housing. It doesn't constitute a "drain" as inventory in urban areas remains constrained and prices are holding high.

[LivingAlmostLarge]

I heard on NPR that it's becoming the haves and the haves not. The people who already own are by far their wealth are accumulating much faster than renters. More so than before.

And the second part which I've found to be true anectodally is that people aren't moving. They might have moved before but they are turning their old homes into rentals or they are sticking put because the interest rate makes it very much less desirable to move. We're in that group of people that I'm not sure we could be tempted to move.

Thus the inventory is also constrained because starter homes or move up buyers aren't moving. So the lower tiers or pricing is still going up while the higher tiers are freezing or dropping.

And of course builders aren't building because they can't hire enough people at least according to a lot RE podcasts I was listening too. The idea that they can suddenly build more and make more money seems great. But there is a lot less skilled labor than before to build these homes. And yes it's skilled labor. Maybe general building, but plumbers, electricians, HVAC, aren't easily available to hire and there is nothing to move the process on faster if you can't get the labor to build faster.

[Fishindude77]

I wouldn't look for real estate prices to drop. The rate of $$ increase will likely slow a bit from the rapid increase we've seen in last couple years, but don't sit around waiting for for a bottom dollar bargain.
There is still some cheap stuff out there, but is in poor condition and requires someone willing put in the effort to clean it up and turn the place around. If you have the ability to do a lot of the work yourself, someone with limited funds can still get into home or real estate ownership. Many are unwilling to do the work.

Folks currently carrying one of the 3% mortgages are going to be less likely to move as they'll be jumping up to 7% plus. However, 7% probably isn't going to heavily distract new buyers from buying, they'll just have to reduce their "wants" a bit to get into an acceptable payment range.
Our mortgage on this place in 1990 was 9.9%, so todays rates are not ridiculously high.

Good properties have never been easy to get. You need to have your financial ducks in a row and be ready to pounce on something you like soon as it comes up for sale, and be prepared to pay what it takes to buy the place, because you likely won't get a second opportunity.

[LivingAlmostLarge]

I wouldn't look for real estate prices to drop. The rate of $$ increase will likely slow a bit from the rapid increase we've seen in last couple years, but don't sit around waiting for for a bottom dollar bargain.
There is still some cheap stuff out there, but is in poor condition and requires someone willing put in the effort to clean it up and turn the place around. If you have the ability to do a lot of the work yourself, someone with limited funds can still get into home or real estate ownership. Many are unwilling to do the work.

Folks currently carrying one of the 3% mortgages are going to be less likely to move as they'll be jumping up to 7% plus. However, 7% probably isn't going to heavily distract new buyers from buying, they'll just have to reduce their "wants" a bit to get into an acceptable payment range.
Our mortgage on this place in 1990 was 9.9%, so todays rates are not ridiculously high.

Good properties have never been easy to get. You need to have your financial ducks in a row and be ready to pounce on something you like soon as it comes up for sale, and be prepared to pay what it takes to buy the place, because you likely won't get a second opportunity.

This. Also the thing is that I don't think we are seeing another 2008 and waiting for prices to go down 50% is realistic. Some people tell me "oh it'll drop a lot". Inflation makes it also more difficult to have the prices drop because the dollar is now inflated as well.

[Jluke]

People with 3% mortgages most likely took them out before home prices increased anywhere from 100k-200k or more.

so yet another reason they won’t move because they will probably be getting less house than what they paid for their current home.

My idea of downsizing is off the table if these are the new normal for home prices.

I’m mentally anchored to what I sold my old house for and what I paid for this house.

[LivingAlmostLarge]

And with rising costs people are hesitant to move period when you know what you have is affordable. It's a different scenario if your situation changes.