Will property market crash?
Real estate experts are optimistic about the current market due to so-called “solid fundamentals.” Creditworthy borrowers and strict mortgage qualifications coupled with a fundamental imbalance between supply and demand have created a strong seller market that some believe could last at least 10 years. The housing stock in the 50 largest subways in the USA decreased by 24.2% in November compared to the previous year, which corresponds to an increase in the decline rate compared to the decline of 21.1% last month.
Regionally, the number of houses in western and southern metros shows the largest decline compared to the previous year (-28.2%), followed by the northeast (-22%) and the mid-west (-13.7%). It may take longer to recover from the greater stock shortage in the South than in other areas. Metros, the typical home, spent 41 days on the market, and houses spent an average of 6 days less on the market than last November. Among these 50 largest subways, the time a typical property spends on the market has decreased the most on major subways in the south (-8 days), followed by the northeast (-5 days), the west (-4 days), and the midwest (-3 days).
We simply didn’t know how hot the real estate markets could get until the new record lows in interest rates for first-time buyers moved up. Unlike the stock market, where people understand the risk and accept that prices sometimes drop sharply from time to time, many people who buy a house don’t really believe that the value of their home will ever fall that much. Doug Duncan, chief economist for mortgage giant Fannie Mae, acknowledges concerns about the stability of the real estate market. Demand continues to rise as speculators enter the market, making the bubble bigger when they grab investment property and fixer-top flips.
According to this study, suburban housing markets did not strengthen disproportionately quickly compared to urban markets. Mortgage interest rates at record lows and a lack of available inventory are driving demand from the US real estate market. The double-digit annual growth in list and sales prices shows an extreme shortage of inventory and incredible demand. A sign of a seller’s real estate market. However, real estate markets sometimes go through periods of irrational exuberance and see prices rise quickly before they come back into line.
We expect buyer demand to subside as the erosion of affordability takes a toll and additional inventory for sale enters the market. As a result, there will be no drop in home prices, but there will be a pullback, which is normal for any asset class. For the same reason, the market for single-family homes will continue to be active as younger families make decisions about the quality of life. With less competition and more housing available, some buyers may find it easier to navigate the real estate market, even if they pay more for a loan.
Next year, I expect additional regulatory action against lawsuits that are considered harmful to home buyers or to the market as a whole.
