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.
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.
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%.
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.