Whats up everyone

According to consumeraffairs.com, 78% of Americans EXPECT a housing-market crash and 63% of those surveyed WANT a housing crash. 80% WANT a housing correction.

So, lets take a look at the consumer affairs article and see who wants a crash, who wants a correction, which markets are expected to crash first and when they are expected to crash. Then we’ll take a look at the latest data on the housing market.

Lets dive right in

First let’s define a crash vs a correction.

A housing crash is a sudden and steep decline in home values, often leading to economic ruin for many homeowners. 

A housing correction, on the other hand, is a slow and steady return of elevated home values back down to balanced levels.

So,  78% of Americans are expecting a housing market crash and 63% WANT it? 

Maybe thats because 75% of respondents said they plan to buy a home if the market crashes. 

 Gen Z (born 1997-2012) are the most eager to WANT a market crash with 84% hoping for one to help them purchase their first home. 

Despite their hopes for a cooler market, according to consumer affairs, Gen Zers have the least saved for a home: $15,601, on average. 

Their smaller savings might be due to their age (they’ve had less time to save) or the drastic rent increases many have faced in the U.S. recently. 

If a crash were to happen, WHERE do people think it would hit first? 

Let’s take a look at what their survey said.

In the last few years, many people were able to work from home so they moved from the city life to farther out where they could afford a bigger home. 

Low interest rates and government stimulus payments during the pandemic made it possible for many to relocate.

 With low inventory and more buyers, prices started to go up due to bidding wars and reached all time highs.

SO NOW, With interest rates rising, most people in their survey  believe metropolitan areas will be affected first if the market cools down. 

They ranked the top 50 most populated cities in order of which markets they thought would crash first.

Austin, Texas, appears at risk — 33% of respondents singled this city out as the most precarious market. 

The other cities spanned the country, with Atlanta, Georgia, ranking second at 26%; Los Angeles, CA at. 23%, New York City ranking eighth at 17%; and two California cities, Long Beach and San Francisco (both at 15%), rounding out the list.

The next big question is WHEN do most people think the housing market will crash?

Of those expecting a crash, 36% of respondents expect it this year, 49% next year, 7% in 2024 and the same amount in 2025. 

More than half of baby boomers (born 1946-64) believe 2023 will bring a housing crisis.

Next, they asked respondents if they would need to sell their homes in the event of a recession and what their next steps would be if that happened.

If the country goes into a recession, Nearly two-thirds (65%) surveyed said they would need to sell their home. 

This scenario was equally likely among Gen Zers and baby boomers, with both generations most likely to say they’d have to sell. 

Overall, 82% believed a market crash would at least leave them owing more on their mortgage than their home is worth.

A market cooling would also open the door to prospective homeowners, including those who might have to sell their recently purchased homes. 

And while only 4% of homeowners thought they would be able to upsize during a housing crash, 79% said they’d be able to downsize rather than rent. 

That’s good news for millennials, who were most likely to favor downsizing over renting.

For those who think they would have to give up their home, 79% said they would downsize, while 21% said they would turn to renting.

Next they looked at renters. 

Looking at renters, 91% of them fear that increased mortgage rates will price them out of the homebuying market. 

The 30-year fixed mortgage rate averaged 5.22% in the week ended Aug. 11, up markedly from 2.87% a year ago, according to Freddie Mac.

52% of renters think they won’t be able to buy a home within the next year if the market DOESNT crash. 48% think they will. 

Meanwhile, 28% of renters think rent increases won’t slow down, even if the housing market crashes. 72% thing they will.

ConsumerAffairs surveyed 1,003 individuals to explore perceptions about a potential housing crisis. Of these respondents, 502 were homeowners that had purchased their home within the last TWO years, and 501 were renters.

I’ll put the link below so you can read more about the survey.

Now lets look at the latest data on the housing market.

This housing market update from Redfin was published August 11th. Newly-Listed Homes Fall Most Since 2020 as Sellers Pull Back

In this update, Redfin reports that New listings of homes for sale dropped 12% year over year during the four weeks ending August 7, the steepest decline since June 2020.

Homeowners are staying put because there are less buyers due to higher mortgage rates and they don’t want to trade in their low interest rate for a higher one. 

And pending home sales are down 16% from a year ago.

Despite the decrease in new listings, overall housing supply continues to grow—a sign that homebuyers are pulling back more than home sellers. The total number of homes for sale is up 4% year over year.

That’s good news for the buyers who can afford to remain in the market because it means that there is more inventory so they have more homes to choose from.

Redfin Deputy Chief Economist Taylor Marr said “Buyers are backing off due to rising housing costs and sellers are holding back because they realize they won’t get the bidding war they would have gotten six months ago. The good news is this is bringing balance to the market. If mortgage rates resume their downward trajectory, more buyers and sellers could get back in the game.”

Lets take a quick look at some of the other market indicators.

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