Is the housing market starting to crash? The theory of supply and demand dictates that when the demand for housing exceeds the supply, people will pull out of the market. As mortgage rates rise, home values will start to soften. Currently, the U.S. housing market is a buyer’s market, but overbuilding will soon cause the market to crash. It is possible that the market will rebound, but that will depend on the economic conditions and the quality of mortgage lending.
Home prices have risen dramatically in recent years, and many prospective buyers have been waiting for the right moment to buy. In such a scenario, the supply of homes is so low that buyers have to bid up prices. That doesn’t indicate a crash in prices anytime soon, though. If a market were to crash, the price of homes would fall by a significant amount. There simply aren’t enough homes on the market to accommodate all the demand.
The underlying cause for the market’s decline is that the Fed has tightened its monetary policy in an attempt to cool the economy. This tightening has led to a drop in demand and a wave of foreclosures, which in turn caused the housing bubble to burst. As a result, owners who try to sell their homes have little demand on the market. Some households have even been forced to walk away from their properties because of their overpriced mortgages.
BobJ 