10 Warning Signs That Indicate If the Housing Market Is Crashing
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For a homeowner or a buyer, the thought that the housing market might be crashing is pretty scary – the last thing you want is to be responsible for an enormous, overvalued asset while the economy is crumbling. But sometimes, the housing market can remain strong while the overall economy is suffering, and vice versa.
1. Home prices are plateauing after long periods of rapid acceleration
When the price of homes plateaus after growing consistently year-over-year, it could serve as a warning sign of a housing market crash.
Land is an appreciating asset because there’s only so much of it (and not all land is buildable). The price of homes (including the land) usually increases by about 4% per year.
When home prices level out or plateau, it affects home appreciation as well as the real estate sales market. Sometimes when enough sellers are unable to find a buyer for their homes, they will lower the price in order to attract more buyers.
If you are unsure about how prices have changed on a national level over time, the Case-Shiller home price index is available on the St Louis Federal Reserve website and shows the change in home prices since 1987.
2. There are a lot of risky mortgages in the market
Another sign that a housing crash may be imminent is when we start to see lower credit standards and riskier mortgages expanding in the market. If lenders https://homeloansplus.org/payday-loans-mt/ loosen up underwriting standards too much, these higher-risk mortgages can trigger a housing crash because they could be offered in bulk to buyers who can’t actually afford the homes, or for home sales where the properties are priced higher than their market value.Lees verder »10 Warning Signs That Indicate If the Housing Market Is Crashing