TurnKey Dreams

A housing crash is when houses drops greater than or equal to 10% of its market value. This is what was experienced back in 2008- House values dropped 10% and higher causing home owners to become upside down- their mortgage was greater than the home value. This caused many foreclosures and short sales.

Our market today, unlike in 2006 where irresponsible lending practices were enabling “everybody and their dog” to buy homes, is driven by real people and institutions wanting housing. The lack of inventory is driving demand and will continue to be this way until inventory catches up with demand. Inventory needs to out pace demand in order for housing prices to start coming down at a faster pace.

Along with a rapid rise in inventory, many other factors would have to simultaneously happen in order for a housing crash to happen (e.g. higher interest rates, longer days on market, etc). According to Redfin analytics we're currently sitting at around 655,000 of housing inventory and demand is still out pacing supply. We would need to see that inventory significantly increase within a short period of time; an increase of ~3X (1.8M inventory) along with the other factors mentioned above.

According to Redfin the "new listing" data trend is increasing. This is a good sign, especially with inflation around 8.5% and mortgage interest rates in the 5% range, but inventory is still significantly lower than prior pre-pandemic years; hence the reason we're currently in a housing shortage.

So again, once inventory catches up with demand, don't expect to see these housing prices crash. The Feds are slowly taking the air out of the housing bubble with these rising interest rates which is decreasing housing demand and leveling out housing prices. Gone are the days of 20%-30% over asking price. This isn't necessarily a bad thing since this move helps normalize the housing market.

https://www.redfin.com/news/data-center/