Is the Housing Market Bubble Bursting? Here’s What Experts Say.
The U.S. housing market has been experiencing a wild ride over the past year. Home values saw a significant surge during the pandemic, but now, as we creep closer to the end of it, the market is cooling down once again. Many homebuyers and new homeowners are wondering what the future holds for the housing market. Will the market be crashing soon? What is the outlook for 2023? In this blog post, we’ll take a look at what experts have to say about the possibility of a housing market crash in the near future.
According to CBS News, home inventory has dropped significantly, making it tougher for house hunters to find a home to buy, particularly in large cities. However, CNBC reported that home prices may not continue to decline after the current slowdown. Steep competition in the housing market and low supply are heating up home prices again. Nationally, home prices in March were 0.7% higher than March 2022, according to S&P CoreLogic Case-Shiller Indices. These mixed signs show that the market may not crash, but it may experience a slowdown rather than the surge it has seen.
US mortgage rates are another factor to consider when predicting the future of the housing market. Unfortunately, CNN reported that US mortgage rates jumped higher, reaching their highest level since November 2021. This could make buying a home more expensive and reduce the demand for homes. In fact, CNBC reported that mortgage demand had dropped to the lowest level since the end of February. Despite these negative signs, it is important to consider that mortgage demand may pick back up if interest rates stay low, making this an opportune time for homebuyers in some regions.
Lastly, MarketWatch reported that a record number of homes are being built by investors to rent. Many people wonder if this hurts or helps aspiring homeowners. Interestingly, the surge in rental homes could help stimulate the housing market by freeing up inventory for those who want to buy homes. According to the National Multifamily Housing Council (NMHC), there are 44 million rental households in the US, and the number is growing rapidly. Investors building homes for rent are likely looking to meet this demand, meaning that there is money to be made, even if it’s not through a traditional home purchase. The fact that more rental homes are being built doesn’t necessarily spell doom for the housing market.
In conclusion, while there are some factors that may cause concern about the outlook of the housing market, a significant downturn or crash doesn’t appear to be in the cards right now. There are many things to consider when predicting the future of the housing market, including home inventory, mortgage rates, and external factors like investor activity in the rental market. Overall, it seems like the market is still in a good position, but that could change if any external factors arise over the next few years. As always, it’s essential to stay informed to make informed decisions.
Reference:
https://www.cnn.com/2023/05/23/homes/new-home-sales-april/index.html
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