Why You Shouldn't Panic About the Housing Market in 2023
Are you one of the many Americans worried that the US Housing Market is about to crash? Are you experiencing flashbacks from the housing crisis that dominated headlines over a decade ago? If you are, you're not alone.
Americans Fear A Housing Crash
Statistics reveal that approximately two-thirds of Americans believe there will be another housing market crash in the next few years. With the recent COVID-19 pandemic, unemployment rates have been on the rise, and many individuals have been struggling to make ends meet. Thus, it's understandable why the looming fear of a crash is present.
Why A Housing Market Crash Is Unlikely
However, while the fear of a housing market crash is understandable, the reality is that a crash like we experienced in two-thousand-and-eight is unlikely. Why? Because today's housing market isn't the same as it was fifteen years ago.
Tighter Mortgage Standards
Firstly, let's talk about mortgage standards. Getting a home loan back then was much easier than it is today. Nowadays, mortgage standards are tighter, meaning that buyers are more qualified. Therefore, the likelihood of defaulting on their loans is lower.
We've also noticed that there are fewer foreclosures happening in today's market than there were years ago. This observation can be attributed to the initial point raised. Since buyers are more qualified and less likely to default on their loans, fewer foreclosures are happening.
Limited Properties For Sale
Lastly, we have the shortage of houses available for sale. For years, the construction industry has underbuilt homes, resulting in limited properties for sale. In contrast to the past, there are not as many homes present for buyers to choose from. This gap between supply and demand causes home prices to remain high.
The Bottom Line
When we look at the facts, it becomes clear that today's housing market is vastly different from the market in the past. Mortgage standards are tighter, foreclosures are fewer, and the numbers of properties available in the market are significantly lower.
There's no need to let the fear of a housing market crash consume you. However, this does not mean that there are no risks in the housing market. Buyers should continue to make informed decisions and take their time while making home-buying decisions. By exercising caution and prudence in this market, you can enjoy the many benefits of homeownership without experiencing buyer's remorse.
1. Will, there be a housing market crash soon?
2. What happened during the housing market crash in 2008?
The 2008 housing market crash was caused by a surge in subprime mortgage lending, and borrowers defaulting on their loans. The crisis led to the collapse of many financial institutions, including banks and investment firms.
3. Should I buy a house now, given the state of the housing market?
Although homeownership is a valuable investment, it is advisable to exercise caution and take your time when buying a house. Always make sure to make an informed decision on the property, loan, and vendor.
4. Are mortgage standards tighter now?
Yes, mortgage standards are tighter now than they were fifteen years ago. Expect more scrutiny during the mortgage application process, with lenders checking your credit history and ability to repay the loan regularly.
5. Why is there a shortage of homes for sale in the US Housing Market?
The undersupply of homes for sale can be attributed to a combination of numerous factors, including economic and legal restrictions, spanning across market cycles. Experts forecast that the problem is set to persist and potentially worsen in the future.