According to a recent report from NerdWallet, 67% of Americans fear a housing market crash imminent within the next three years. This sentiment is likely since home prices have begun to fall in some cities. However, it’s important to note that a drop in home prices isn’t necessarily a crash.
MarketWatch reports that home prices fell on a year-over-year basis in 18 of the 50 most populous U.S. metro areas, with the most significant drops happening in San Francisco (10.1%), San Jose (6.7%), and Austin (5.5%). Despite this, a report from Redfin revealed that for the four weeks ending January 15th, the median price of a house sold in the U.S. was up 0.9% year-over-year to $350,250.
Several factors are contributing to the fear of a housing market crash:
- A worsening economy has led to concerns about layoffs in the tech and financial sectors and widespread conversations about a recession. This is preventing some people from buying homes.
- Higher mortgage rates have made it more difficult for people to afford a house.
- High home prices have also made it difficult for many people to enter the housing market.
While a market correction could bring about significant changes for the real estate sector in the year ahead, experts say that a crash isn’t likely as long as prices remain stable. It’s important to note that a drop in home prices is not the same as a crash. While a market correction may be uncomfortable for some, it is a natural part of the housing market’s cyclical nature.