MINT HILL, NC – Many are worried about a potential housing crash coming in the near future, and rightfully so. Things in our world are a bit chaotic economically, politically, and in many other ways. It’s important to look at what experts think and what might be coming.
Yahoo.com published an article from USA Today with opinions from eight different experts on a potential housing crash. Let’s look at some of these opinions and what you might see in the near future.
https://autos.yahoo.com/autos/housing-crash-horizon-eight-experts-090018014.html
Will There Be a Housing Crash Soon?
The consensus of the experts is no, but it’s necessary to look a bit further. One of the major worries of buyers and sellers is what they lived through in 2008. However, the current 2021 housing market isn’t the same boom-bust cycle as it was before 2008.
The 2008 crash was caused by subprime loans made without verified income or large enough down payments. In other words, super risky loans were made and the borrower couldn’t pay them back. This is not the case right now.
In fact, right now, the underwriting for a mortgage is rather strict. Interest rates are very low, as well.
Will Higher Home Prices Cause a Crash?
Higher home prices are obvious right now. However, many of the experts believe the rising prices will start to slow down in 2022. As more inventory becomes available, the demand will become a bit less. This may be the cause of home prices starting to rise at slower rates.
Most experts believe higher home prices are not likely to cause a crash in the housing market.
Forbearance Programs Helped
One of the reasons homeowners didn’t end up in a worse situation during COVID-19 was the forbearance programs. The CARES Act provided the ability for many homeowners to make smaller mortgage payments or even skip payments for several months. This gave homeowners more cash to deal with emergencies during 2020.
About 4 million mortgages went into forbearance in May 2020 due to COVID-19. As of September 2021, about 1.6 million homeowners were still in forbearance. We are now starting to see what might happen with these mortgages as the forbearance program ended in September 2021. Most lenders are working with borrowers to restructure their loans. Some homeowners are selling, as well.
Massive foreclosures are not happening as they did between 2008 and 2012. Experts guess about 8 to 10% will end up in foreclosure, which is nowhere near the 11 million mortgages that went through foreclosure after 2008.
The Consensus
The experts don’t believe we are headed into a potential housing crash. With lower mortgage rates, inventory starting to grow, and prices slowing down, the market is starting to return to normal.
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