The last major housing market crash occurred a little more than a decade ago. If it did not affect you directly, there is a strong chance that you know someone who was hit hard by that crash. With today’s home prices skyrocketing in many areas, it is easy to note that conditions are similar to those leading up to the last crash. Before you hold off on your plans to buy, sell or refinance, it is important to have a clearer understanding of the potential timing for the next housing market crash.
The housing prices in many areas are rising because of high demand and limited supply, and housing prices in most major majors have surpassed the levels they were at when the last bubble burst. While this is an important factor that could lead a market crash, other factors play a role as well. For example, the last crash was also affected by buyers purchasing their houses at inflated prices with no or little money down. Today, home loans with ultra-low down payment requirements are also available.
For the last 200 years, an 18-year cycle in the real estate market has held steady. If this cycle continues to hold steady, the current cycle will peak in 2024. The cycle is marked by a recovery phase and an expansion phase. This is followed by a period when supply exceeds demand. Prices inevitably fall. Currently, our market is in the expansion phase, so the theory of an 18-year cycle may hold true.
While the prospect of a housing market crash within the next few years could be intimidating, bear in mind that the severity of an anticipated crash will vary in different markets. More than that, if you have a solid amount of equity in your home and maintain good financial health, you can ride through the crash like millions of other homeowners did in the past. To inquire about current home loan programs and rates, contact MortgageDepot today.
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