Looking to the past as indicators of what could happen to housing in the future has usually been fairly accurate in the past but not so much these days.
With home prices up over 35% in some markets since March 2020 and a rate-tightening U.S. Federal Reserve, many experts are writing about a housing and mortgage apocalypse arising anew. However, while housing prices might pull back 10% or more in some regions, a nationwide collapse on the scale of the financial crisis remains highly unlikely.
Home prices are dictated by three factors: supply, demand, and affordability. Fortunately, there doesn’t seem to be a repeat of 2007/8 in these three factors this time.
With inflation the highest it’s been in 40 years and the Fed raising interest rates at a pace not seen since the 1990s, mortgage rates have more than doubled to close to 6% last week.
The housing market likely is heading into a mild recession in 2023.
Two factors that have changed since the first of the year are the number of housing contract cancellations for both resale and new homes. The second is mortgage lenders are beginning to close their doors or cut back on staffing. Neither of these signals a crash. But it can mean that a simple correction is no longer in the picture.
The best we can hope for is a controlled burn recession.
Take a few minutes and check out this latest video:
Could Australia’s Housing Crisis Be A Prelude For The US Housing Market?
Inflation And Demand Are Creating Housing Problems For Seniors And Millennials
If This Isn’t A Housing Bubble, What Do We Call It?
Gary Fleisher is the Editor in Chief of Modular Home Source and Offsite Builder. Email at [email protected]
To learn more about the Offsite Construction Industry, sign up for your free monthly issue of Offsite Builder, the Construction Magazine for Builders and Developers
