7 Painful Reasons to Fear a Money Hit of a Housing Market Crash

Unlike the stock market, where consumers are aware of and accept the risk that prices will fall from time to time, many people who purchase a home do not believe that the value of their home will plummet soon.

Compared to other asset types, the housing sector has typically been unaffected by price bubbles.

It could be due to the high transaction costs of buying a home and the cost of owning and maintaining a home, all of which discourage speculative behavior.

However, property markets do occasionally experience moments of irrational exuberance, with prices rising rapidly before returning to normal.

Signs That the Housing Market Will Crash

After an Extended Period of Acceleration, Home Prices Are Plateauing

When the property price consistently increases year on year, it indicates the possibility of an impending housing market correction.



Investing in Real Estate or Buying a New Home?

Learn About Emerging Trends In: Mortgage rates  Buyer demand Home values Real estate investor trends

Because there is a finite amount of land, it appreciates (and not all land is buildable). The average annual increase in the price of a home (including the land) is roughly 4%.

Numerous Risky Mortgages Available

When we start to see lower mortgages expanding in the market, it’s another warning that a housing crash is on the way. Higher mortgages could create a housing catastrophe if lenders relax underwriting credit standards and riskier mortgage requirements.

They can be offered to buyers who can’t genuinely afford the homes or for home sales when the properties are priced higher than their market value. On the other hand, if lenders begin to relax their requirements to accommodate an excessive number of higher-risk borrowers, it could result in a housing bubble (artificially inflated property values) followed by a housing market crash.

Swipe up now to read the full post!