6 Reasons To Fear Greed: Will There Be A Housing Market Crash?

Home prices in the United States have reached new highs and are rising, prompting some researchers and economists to warn that a bubble is forming and a housing market crash will soon follow.

6 Reasons To Fear Greed: Will There Be A Housing Market Crash?

1. Millennial Demand For Housing

The number of prospective homebuyers is abundant, with Millennials and younger Americans accounting for half of the population, or 166 million people. According to data from the National Association of Realtors, first-time homebuyers account for the highest number of individuals buying homes (31%).

2. Supply Cannot Keep Up With Demand

The fundamental reason home prices have risen so quickly is the supply-demand imbalance. And after not constructing enough houses for the past decade, it will take at least several years for homebuilders to add enough new supply to bring the market back into equilibrium.

3. Borrowers Are Less Likely To Fail To Pay Back Their Loans

One of the key differences between today’s housing market and the one that prevailed before the housing disaster is that lending standards have tightened because of lessons gained and new rules established in the aftermath of the previous crisis. 

4. Economic Growth

Economic growth shows an upward trend. However, inflation remains an issue. As of February 2022, the economy is growing strongly, with high gains in employment and consumer expenditure.

5. Signs That the Housing Market Is About to Collapse

Many analysts see the economy as “strengthening,” yet there are rumblings of a recession beneath the surface. Last year, when consumer prices began to rise, inflation began to rise, raising alarm bells.

6. Ukraine’s War against Russia

Energy prices are expected to rise since Russia’s oil has been prohibited by the US and the Eurozone. Increased energy prices will increase inflation. Rising interest rates and inflation will drive individuals to cut back on their spending.

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