On ecapitalhouse.com.vn, we bring you a comprehensive article on the status of “Real Estate Housing Market Crash“. With the US housing market slowing down after a period of strong growth, we face questions about the potential for a market crash. Experts give key views, assess prospects and the next direction of the market. The article provides data, statistics and future prospects, helping you better understand the current housing market situation.
I. The current state of the US housing market
The current state of the US real estate market is witnessing a slowdown after a period of significant growth. Prior to this, the housing market went through a substantial boom with soaring home prices and historically low mortgage rates. However, since the beginning of 2023, there have been signs of market deceleration, raising concerns about the possibility of a housing market collapse.
One of the key factors contributing to the market slowdown is the rise in mortgage rates. After a prolonged period of low rates, mortgage rates have begun to increase, making homebuying more expensive. This significantly impacts the affordability of homes for many people, thereby reducing demand and sales volume.
Additionally, there is also a shortage of housing supply. During the rapid growth period, many homeowners decided not to sell their homes to enjoy the benefits of holding onto them amidst rising prices. This has led to a scarcity of available homes for sale, intensifying competition in the homebuying market. This supply shortage also affects home prices, creating upward pressure and posing challenges for buyers.
From these signs, an important question arises: is the housing market on the verge of collapse? While it is impossible to provide an accurate prediction, the slowdown and underlying factors do raise a warning about the possibility of a downturn. Recent declines in home prices and sales volume are preliminary indicators, but if this trend continues, the market may face significant challenges in the future.
However, it is important to note that the current market slowdown does not equate to a complete collapse. Compared to the previous Great Recession, the financial and mortgage conditions of buyers and homeowners are assessed to be much stronger today. This can help mitigate the negative impacts of the adjustment and create a more stable real estate market in the near future.
II. Causes of market crash
The slowdown and potential collapse of the US real estate market can be explained by several key factors, including increasing mortgage rates and a shortage of housing supply. Below is a discussion of these factors and their impacts:
Rising mortgage rates: An important factor contributing to the slowdown of the real estate market is the increase in mortgage rates. Higher mortgage rates can raise the cost of homebuying for buyers, reduce affordability, and consequently dampen demand and sales volume. The higher interest payments can also restrict the financial capacity of buyers and create difficulties in accessing loans.
Housing supply shortage: Another factor impacting the market is the shortage of housing supply. During the growth period, many homeowners decided to hold onto their properties to benefit from rising prices. This has led to intense competition in the search for homes and upward pressure on prices. The housing supply shortage also contributes to lower sales volume and creates an imbalance between supply and demand.
The impact of rising mortgage rates and housing supply shortage can decrease buyer interest and participation in the market. This can result in lower prices and sales volume, leading to a slowdown in the real estate market. However, it should be noted that the degree of impact from these factors can vary and depend on various other factors such as financial and economic policies, market sentiment, and the overall state of the economy.
III. The difference between the current market and the previous Great Recession
Comparing to the previous Great Recession, the current real estate market has important differences. Below are the differences and changes in the financial and mortgage conditions of buyers and homeowners, along with a forecast of the potential collapse:
- Financial and mortgage conditions: Compared to the previous recession, the financial and mortgage conditions of buyers and homeowners are considered much better. In the previous period of strong growth, many buyers obtained low-interest loans and lenient terms. However, after the recession, many faced difficulties in debt repayment and mortgage pressures. In contrast, currently, buyers and homeowners generally have improved financial conditions, with low fixed mortgage rates and better credit.
- Housing supply: A notable change is the housing supply situation. In the previous recession, there was a large inventory of distressed properties due to bankruptcies and foreclosures. This led to an oversupply, impacting price reduction and devaluation. However, currently, due to homeowners choosing to hold onto their properties to benefit from the growth period, there is a scarcity of housing supply. This creates intense competition in the housing market and may exert upward pressure on prices.
Forecasting the potential collapse is a challenging aspect to make accurate predictions. Although the real estate market is slowing down and exhibiting negative signs, this slowdown does not imply a complete collapse like in the previous recession. The differences in financial and mortgage conditions, along with vigilance from financial and economic policies, can help mitigate negative impacts and create a more stable real estate market in the future.
IV. Real estate market data
The real estate market data provides information on home prices, sales volume, and inventory, indicating recent declines in home prices and sales volume. Here is a summary of the relevant figures and statistics:
Home prices
The national average sales price in April 2023 was $388,800, a 1.7% decrease compared to the previous year. The most recent S&P CoreLogic Case-Shiller National Home Price NSA Index shows modest price increases for the second consecutive month following seven months of decline.
Sales volume
The National Association of Realtors reports a 3.4% decline in home sales from March 2023 to April 2023. The decline from April of the previous year is 23.2%.
Inventory
April witnessed a housing inventory supply of 2.9 months, significantly lower than the necessary 5 to 6 months for a balanced, healthy market. A total of 35,196 homes in the United States had foreclosure filings in May 2023.
From the above data, it can be observed that there have been recent declines in home prices and sales volume. Home prices have decreased by 1.7% compared to the previous year, and home sales volume has decreased by 3.4% in April 2023. This indicates a slowdown and the market undergoing an adjustment after a period of strong growth. Additionally, the shortage of housing inventory contributes to this decline, as the inventory levels are lower than necessary for a balanced, healthy market.
V. Expert opinion
Lawrence Yun, chief economist, National Association of Realtors: He emphasized that the housing market is slowing down, but there is no clear sign of a full-blown collapse. He thinks the decline in home prices and zero home sales won’t be as severe as during the previous Great Recession.
Rob Dietz, chief economist, National Association of Builders: He thinks the housing market will experience a moderate recession and does not expect a severe collapse. He emphasized that the financial and mortgage status of buyers and homeowners is much better today than it was before the Great Recession.
VI. Prospects and future directions
The prospect of the housing market in the near future is still quite dim and depends on many factors. Here are the factors and potential variables that could affect the market and forecast its next direction:
- Mortgage Rates: Rising mortgage rates may continue to put pressure on homebuyers and reduce demand for homes. However, the importance of mortgage rates in determining the next direction of the market is considered an important factor.
- Housing supply: Shortages in housing supply may continue to contribute to price increases and difficulty in accessing housing. Homeowners’ considerations about selling their home at this time can significantly affect home supply and market conditions.
Forecasts and comments on the next direction of the housing market can be seen as a modest correction after a period of strong growth. While the slowdown and decline in housing prices may continue for a short time, there is no clear sign of a full-blown collapse. Homeowner considerations, financial and economic policies, along with the better financial and mortgage status of buyers and homeowners, can help create a more stable housing market in the future. future.
VII. Analyst video real estate housing market crash
