Is the housing market set up for a major crash?
Unless you have lived on Mars during the last 2+ years, you’re aware of the red-hot real estate market. According to Case-Shiller Home Price Index, median home prices have risen 20% year over year since 2020. This unsustainable growth is cause for concern. Combine this with inflation rising over 8%, interest rates hovering around 6%, and extremely low inventory and you can understand why some experts think a bubble burst is undeniable.
If I could predict a major market crash, I wouldn’t be helping you sell your home. I’d be at Lake Como, Italy (Hello, George and Amal!), cruising on a vintage Chris Craft boat, living the good life because I was able to predict events before they happened.
Maybe one day! But for now, here’s what we do know with confidence: The Fed just raised rates ¾ points – the largest rate hike since 1994. So, does rising inflation, pumping too much money into the economy, overpriced homes, and extremely low inventory crash the housing market? Well, I’ve never seen a market crash with low inventory. Usually it’s the reverse – too much inventory and a lack of demand. So, what we’re seeing is a market correction to help stabilize this unforeseen rapid growth. Unfortunately, the stock market is going through a major correction after 10 years of continuous growth as well. If the stock market were to crash, then we have additional reasons to be concerned. If the economy continues down this path, then the job market may decline, rippling to job loss and home foreclosures.
The Current Housing Market
Now, back to the housing market. Yes, rising interest rates, buyer frustration over the last two years, and a lack of inventory are producing a slowdown in the housing market.
But wait, there is good news! The real estate market never really crashes. It may flatten a curve, but it never crashes. If you could perfectly time either market, you would always increase the value of your investments. But the real estate market never really crashes so you won’t lose your home’s appreciation. So, if you’re looking to buy, sell or invest in real estate – now might still be the best time to move forward – with the right strategy in place. Allow The CK Group to build a tailored strategy for you to win in any market condition.