Unauthorized Housing Price Crash: What You Need to Know
Download MP3 Key points:
- Common theories about housing prices potentially crashing due to past trends and rising interest rates
- Comparison to the 2008 housing crash:
- The 2008 crash was caused by people owning houses they couldn’t afford or didn’t need, often with risky mortgage conditions like variable rates
- Today, homeowners are more financially stable with solid vetting and down payments
- Housing as a non-liquid asset:
- Unlike stocks, houses are not easy to flip; selling requires a major commitment (e.g., closing, moving, transferring utilities)
- People typically don’t sell their homes unless they need to
- Supply and demand dynamics:
- Housing demand is increasing due to population growth, but supply is limited
- Even if buyers can’t afford homes, prices may not crash unless sellers are willing to lower their prices
Housing market numbers:
- A rise in U.S. population outpaces the increase in available homes
- New construction and residential permits aren’t enough to meet demand
Factors preventing a crash:
- Sellers aren’t likely to lower prices drastically unless they absolutely have to sell
- Most current homeowners have affordable mortgages and equity, reducing the chance of mass sell-offs
Conclusion:
- Housing prices may stabilize, but a crash is unlikely without widespread desperation to sell
- For prices to crash, both a buyer and a willing seller are necessary
- Key takeaway: A market crash isn’t solely driven by buyer affordability; sellers also need to agree to the price drop for a true crash to happen
Listen to learn more about why the housing market may not crash despite rising interest rates!
