- News & Politics
- Travel & Events
- Professional Services
- People & Blogs
- Cars & Vehicles
- BJ Updates
- Pets & Animals
- How-to & Style
- Film & Animation
- Science & Technology
- Non-profits & Activism
- Web Series
- Health & Fitness
- Art & Culture
- TV & Movies
Prepare Yourself For A Housing Market Crash That Will Freak Americans Out As Prices Collapse By 50%
The last time the U.S. housing market looked this bubbly, property values sharply crashed. Over the past couple of years, double-digit appreciation has been the rule. Buyers were being forced to pay more than the asking prices – sometimes $100,000 more. Since March 2020, home prices skyrocketed by 45 percent, reaching levels that are impossible for many to afford. However, in recent months, a major shift has started to take place. Home sales and price cuts are becoming the new norm, leading the scorching-hot real estate market to a well-deserved slow down. The bubble has been popped by rising interest rates, and a housing market crash that can slash home values in half has begun.
The nightmarish memories of the last boom and bust remain fresh in the minds of homeowners, lenders, and Realtors. With affordability issues squeezing potential homebuyers, the latest price increases are creating no shortage of concern. A new report by Redfin exposes that some of the hottest corners of the market are already seeing some of the sharpest price cuts and big drops in demand. Since August 2021, mortgage rates have more than doubled, and approximately 20 million prospective buyers have been priced out.
According to data compiled by Wolf Richter of WolfStreet.com, price cuts spiked by 50% in June from May, and doubled year-over-year. A Moody’s Analytics report outlined that homes are overvalued in at least 93% of markets across the country, with markets in 11 states overvalued by 50% or more. They are Arizona, Florida, Georgia, Hawaii, Idaho, Nevada, North Carolina, South Carolina, Utah, Tennessee, and Washington. Now, all of these markets are at risk of seeing home prices being slashed in half. “Homes are now even more overvalued than they were during the 2000s housing market bubble,” Moody’s Analytics said.
At this point, American families are facing record-high prices on about every item they need in their day to day lives. And the supply shortages for housing are forcing many to keep renting despite record rent prices. In fact, there is less housing available for rent or sale now than at any time in the past 30 years.
Current rent prices are about $1,100 higher than they were in 2020. A separate report from Redfin uncovered that nationally listed rents for available apartments rose 15% from a year ago. And the median listed rent for an available apartment rose above $2,000 a month for the first time.It really goes without saying how crazy these numbers really are. It’s clear that the housing and rent market can’t keep recording one all-time high after the other. We’re moving towards an affordability reset. More and more sellers and landlords are coming to grips with a new reality: Prices have to go where the buyers and renters are, and they’re are around somewhere, but they’re a lot lower, so prices have to readjust accordingly.
The ones who have benefitted from speculative bubbles had powerful incentives to deny that this massive bubble could bust. But just as all bubbles that arise from speculative excesses, the U.S. housing market bubble reached extreme levels and started to reverse. All these gains are eventually going to be reversed, and if the system is destabilized any further, then the price drops could be far below previous lows. A property value collapse is already underway. And we can only hope this doesn’t end in another global financial disaster.
For more info, find us on: https://www.epiceconomist.com/