Is the Housing Market Headed for a Crash? Here’s What Experts Are Saying
It’s clear that consumers are increasingly worried about the rapid rise in home values. Many fear that this fast-paced appreciation could lead to a market crash later this year.
In fact, Google recently reported a 2,450% spike in searches for:
“When is the housing market going to crash?”
Jim Dalrymple II of Inman News noted:
“One of the most noteworthy things that came up in Inman’s conversations with agents was that every single one said they’ve had conversations with clients about whether or not the market is heading into a bubble.”
What Are Financial Analysts Saying?
To help ease some of these concerns, let’s take a look at what several major financial institutions have said about the housing market within the last 30 days.
The consensus is strong:
The housing market is healthy, and price appreciation is expected to continue.
Goldman Sachs
“Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels. … Consumer surveys indicate that household buying intentions are now the highest in 20 years. … As a result, the model projects double-digit price gains both this year and next.”
Joe Seydl – Senior Markets Economist, J.P. Morgan
“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”
Morgan Stanley – Thoughts on the Market Podcast
“Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation. This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post-pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”
Merrill Lynch – Capital Market Outlook
“There are reasons to believe that this is likely to be an unusually long and strong housing expansion. Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle. Coronavirus-related preference changes have also sharply boosted home buying demand. At the same time, supply is unusually tight, with available homes for sale at record-low levels. Double-digit price gains are rationing the supply.”
Bottom Line
If you’re concerned about making the decision to buy or sell right now, let’s connect to talk about what’s happening in our local market. The national outlook is strong, and understanding your neighborhood's dynamics can make all the difference.
