5 Big Reasons to Fear the Predicted Housing Market Crash

Founder and chief economist of Pantheon Macroeconomics, Ian Shepherdson, predicts that sales may fall significantly this year and we’ll maybe see a housing market crash.

The Decline In Bank Lending

As a result of low liquidity, banks cut back on lending during the 2009 recession. Homeowners wanted low-interest-rate mortgages, but banks kept tightening lending criteria, making it harder to get a mortgage.

Fluctuating Demand And Supply

Just as with goods and services, supply and demand influence home prices. There are buyers and sellers in every housing transaction, so a fluctuating supply of homes will affect prices.

A Less Developed Location

A specific location’s home price may be higher or lower when the national average falls, and vice versa. Desirability plays a role.

Federal Reserve is Adjusting Interest Rates

The Federal Reserve has the authority to adjust interest rates depending on current economic data at specific times throughout the year, impacting the rates that lenders set for mortgages. An example of this was the Fed’s interest rate hike in December 2018.

Buyers’ Expectation of Housing Prices Being Affordable

Affordability is a top concern for today’s home buyers. According to U.S. News & World Report, nearly half of buyers say affordability is their biggest concern, though most said they expect to buy within the next year.

Swipe up now to read the full post!