Many cities have seen a significant increase in home prices in the past year, up 20% or more. The rapid growth in the economy has made some experts question whether the boom will last or whether we will see another bubble (and then burst) like the one preceding the 2008 housing crisis.
Rising Interest Rates and a Greater Number of Houses for Sale
As interest rates continue to rise, this may indicate the impending collapse of the housing market. Several factors, including the current interest rate, contribute to lenders competing against one another to attract buyers.
Housing does not exist in a vacuum, though it may operate independently. Losing a job because of a recession could lead to people being unable to pay their mortgages, and this correlation is inevitable.
We are also likely to see a housing crash when the market begins to expand riskier mortgages and lower credit standards. Easing standards allow low credit quality buyers to make purchases at the exact time house prices are most overpriced.
In a way, the economy and housing are self-fulfilling prophecies – if people think the housing market is not performing well, the housing market will tank. Purchasing or selling sentiment is relatively indicative of a buyer’s or seller’s market.
Agents Or Builders Are Also Hesitant To Make Purchases
Consider real estate agents when you look for professionals who can alert you when the housing market is about to crash. Real estate agents can be your ‘boots on the ground’ and can flag issues as they unfold, their perception of the situation and confidence can be telling.