Housing Market Not Headed For Crash

The real estate market is not headed for a crash – at least not yet. Still, people are concerned about the health of the housing market. Homeowners, especially those thinking of selling, are nervous about their market timing.

If interest rates continue to climb, purchasing power will continue to erode, which will put downward pressure on house prices until they reach lower prices that people can afford. We are still in a low inventory environment. And when inventory begins to rise in conjunction with climbing interest rates, that is when we will see real downward pressure on prices.

The U.S. real estate market experienced inflated prices over the last two years, and it’s likely those prices will decline. But experts say a housing crash is unlikely. The housing crisis of 2008 is what a real housing crash looks like. When comparing the 2008 market to the current real estate market, the current market is more stable. Experts predict the real estate market should see a small 5% correction from the peak of late 2021 and early 2022 housing prices. 

Essentially, there will be a return to a normal housing market where interest rates stay in a realistic range and home prices appreciate slower than they have been. And though there’s been a pullback among buyers, there is still plenty of demand for housing.