Real Estate is one of those businesses in which everyone I talk to wants to talk about it. However the source, everyone seems to know something about it too. People are hearing that homes are
Market Crash in 2022?
Dated: June 30 2021
There has been a lot of speculation recently that this strong seller's market is only short term and that it is going to crash in the next year. Fueling this seculation are three general factors: the market feels similar to 2008, interest rates are going up, and post-pandemic foreclosures are going to flood the market with inventory.
I've talked with a few different mortgage brokers and bankers and they are seeing things differently. First, this strong seller's market is different than 2008 because buyers in this market are mostly buying primary homes and not second or third homes as investment properties. Mortgage companies are operating differently today as well which is also providing more support to avoid something similar to 2008.
The Fed is inching interest rates up, but there is a sense that it is not going to push them even to pre-pandemic levels in the next 18 months. If that is the case, then borrowing will stay strong, buyers will stay in the market, and demand will stay up. On the supply side, many of the foreclosures that were theorized are not materializing. Additionally, many people who took the forebearance opportunity did it becuase they could and not out of need. The number of homeowners that could suffer forebearances make up a relatively small percentage of the overall market. Additionally, the jobs market has rebounded in the past 12 months, quicker than expected which is easing fears of widespread foreclosures.
For these reasons, it does not seem like a market crash is on the horizon. It does seem like the market may slow as this level of appreciation - 12% nationwide - is not sustainable. However, the Texas market is driven by people moving in from other states, which could continue to drive demand. If you're a buyer and waiting for the market to come down before jumping in, you may be waiting a while. I heard one mortgage banker forecast as many as 4-5 years before we see a considerable shift in the market.
Happy Independence Day to you all. May you have a safe and restful holiday weekend.
Hi there! Thanks so much for stopping by. I look forward to working with you. Although I am not a native to Texas, I have now been here for over 20 years. I was introduced to Horseshoe Bay in 2000 and....