The housing market shows a major boom despite fears of a crash



When Americans have a subject of concern to them, who do they turn to? Turns out the answer is Google. Whether the answer is right or wrong, Google will always give you some sort of answer. And that goes for the question of when to buy a house.


Since April of this year, the phrase “When is the housing market going to collapse?” increased by 2,450% in Google searches.

Home selling prices edged down in August. At the same time, stocks increased slightly. Many have suggested that these facts indicate that an impending real estate crash is inevitable.

But the trend did not continue, September figures arrived last Friday from NAR, and they showed lower inventories and a sharp increase in selling prices almost nationwide.

FOX 5 real estate expert John Adams says it’s a matter of supply and demand. Depending on who you think we currently have about two months of homes available for sale. This indicates a strong seller’s market. By comparison, a six-month housing supply inventory indicates a balanced real estate market. More than six months indicates a buyer’s market, and we are moving away from that condition.

Adams believes a real estate crash like the one in 2009 is extremely unlikely, unless the Federal Reserve decides to raise interest rates quickly, which it has vowed not to do.

As to how housing demand can stay as high as it appears to be, Adams suggests four reasons:

The loan market today is fundamentally different from 2008-09 when we offered no asset loans, no income, no jobs with next to nothing down. Today, borrowers need to be well qualified before being approved, and most make large down payments.

With interest rates set at historic lows in an effort to help the economy emerge from the pandemic, borrowing to buy a home is relatively inexpensive compared to the years before the Great Recession. This is not going to change.

Home builders have still not fully recovered from the bombardment they suffered in 2009. Many have left the construction industry altogether. Those who remain are extremely (and naturally) cautious. And those who build experience supply chain problems and a significant shortage of skilled labor. These factors will not change overnight.

Finally, Adams can give you 45 million more reasons why home prices will continue to rise for at least the next few years. They’re called millennials, and they’re taller and better educated than post-war baby boomers. We are looking right in the eye at a “once in a generation” boom in the household generation that could very well last for many years to come.

The bottom line is that while we have all learned that “what goes up must come down”, even this old saw cannot change the law of supply and demand. Home prices have climbed more than 20% since the start of the pandemic. Goldman Sachs economists predicted last week that prices would rise another 16% over the next 12 months.






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