I’m not one for sensational headlines, which is why I debated addressing the fears of a housing market crash.
However, it’s on a lot of people’s minds – and frequently in the news. Google recently reported that the search question “When is the housing market going to crash?” had spiked 2,450% in the past month. “Why is the market so hot?” searches had doubled in just a week.
Those of us who make our livings in the real estate market must wonder about this more directly and often need to field these questions from anxious clients and prospects.
The truth is that the future of real estate also affects financial advisors, insurance agents, and others whom I count in my network of valued referral partners. I’d like you to have some facts that might help all of us gain perspective on what lies ahead!
Here are some excerpts from a CNBC article that offers clarity on key factors:
“The housing market is more competitive than we’ve ever seen it, but a couple indicators are causing us to ask whether we’re nearing a peak in terms of how fast demand and prices can grow,” said Daryl Fairweather, Redfin’s chief economist. “Sellers’ asking prices may be starting to flatten in what so far appears to follow a typical seasonal pattern.”
Fairweather sees the decline in mortgage purchase applications as a sign that some people are dropping out of the market because there’s a lack of affordable homes for sale.
If these trends continue, she said, it could mean that we are “not in the midst of runaway home price speculation or a housing bubble.”
As the economy opens and more Americans are vaccinated, cities could see a rebirth, taking some of the heat out of all that suburban competition.
So, will the housing market crash? Unlikely.
It will cool, no question, but unlike the great housing crash a decade ago, mortgage underwriting is very strict now, so most homeowners can afford the homes they’re currently in.
As the article points out, mortgage rates are slowly rising now, and buyers hit an affordability wall as that happens. We can expect to see annual home price gains nationally cool to the 3% range. But all real estate is local.
The upshot of this is that we are navigating through a very unusual market – and that we are likely to see it cool down to more manageable levels.
While no one can predict the future with complete accuracy, the indicators point to an easing without dire fallout.
I share these things with the intention of keeping you informed and with an invitation to reach out with any questions you might have for yourself or your clients. Each situation needs to be evaluated for its own risks and benefits, and I promise to show up with the most accurate information available.
Please drop me an email or call if you have any questions – or someone you know is in need of expert advice. I love to help those you care about. If you have a referral please click the button down below. Your referrals are the heart and lifeblood of my business.
Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207