5 Signs A Housing Market Is About To Crash

 

Housing markets are cyclical and often swing from a peak to a valley. The key is being able to spot the signs that indicate it's coming down before it crashes in on you, potentially costing you your home. Here are 5 signs indicating we're about to crash into another housing market collapse:

5 Signs A Housing Market Is About To Crash

Berkeley Real estate agency

  • Increasing Inventory - A housing market's inventory is a representation of the number of active homes for sale in that area. As supply increases, demand decreases and prices start to fall.
  • Lack Of Competition - When buyers are scarce, sellers have more negotiating power--and when there isn't enough competition among prospective homebuyers, they can ask higher prices. The lack of competition also means fewer offers on those houses available for sale; this drives up their asking price even further as they wait out potential bidders before dropping their price later on down the road.
  • Interest Rate Hikes - Interest rate hikes can put a strain on homeowners, especially those who bought at the peak of the housing market and/or have variable rates. Homeowners with fixed-rate mortgages will be able to handle rising interest rates better, but for others it might mean that they'll need to sell their home in order to afford higher monthly payments.
  • Depressed Job Market - Homebuyers often use their houses as collateral for other purchases, such as cars or business ventures. When the economy slows down, so do home sales--which means less money available for those sorts of transactions when they happen at all. Low housing inventory also reduces job opportunities within construction companies, which will affect the number of new homes on the market moving forward because builders don't have enough jobs to keep them busy. All these factors lead directly to a decline in demand for houses and subsequently lower house values.
  • High Number Of Foreclosures - One surefire sign is when foreclosure rates skyrocket: this is a clear indication that the housing market is about to crash. The lack of available jobs combined with the high number of foreclosures means many homeowners are underwater on their mortgages, meaning they owe more than what the house is worth. That forces them into foreclosure, which further depresses housing inventory and job availability--leading to a vicious circle that's hard to break out of.

There are many signs that a housing market is about to crash, but it’s difficult for anyone to know how close the bubble may be. Here are five indicators of an impending crash - increasing inventory; lack of competition among buyers; interest rate hikes; depressed job market; high number of foreclosures. If you believe there might be an impending collapse in your area and want some help navigating such uncertain times, visit us at today! Our team of experts can provide you with access to accurate current information on all things real estate so that you don't get caught off guard when the next downturn hits. Interested? Give us a call or stop by our website now! 

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