10 Signs of Potential Recession in the Housing Market

1. 10 Signs of Potential Recession in the Housing Market If you’ve attempted to purchase or sell a home anytime in the past year, it’s likely that your experience was not a pleasant one. Along with gas prices, housing costs have skyrocketed to unprecedented peaks in the past twelve months, and individuals across the United States are suffering because of it. Thankfully, there is an end in sight. Although no one can guarantee the future of real estate, research indicates that housing prices have reached their apex–and that they’re bound to start dropping. Now may be a better time than ever to sell your home, acquire the most that you can for it, and then purchase another home at a significantly lower price. If you doubt the probability of a potential real estate market recession in the near future, take the time to look for the signs and make your own prediction. Below are twenty signs of a housing market crash. 1. Plateauing Home Prices According to the National Association of Realtors, home prices have plateaued and could possibly drop in the near future. Although this is not an official prediction, it is a widely respected view that as markets mature and housing price appreciation slows, real estate values will begin to unwind.

2. 2. Rising Interest Rates In the past twelve months, interest rates have continuously risen, and buyers have been rushing to purchase homes before they increase further. Interest rates are predicted to continue rising, which may make purchasing a home even more difficult for many potential homeowners. Because of this, one can assume that housing prices will begin to decrease to make homebuying more plausible for future buyers. 3. Economic Recession The economy continues to slip downhill, and the housing market is expected to follow. As home prices plateau, consumer confidence in the economy will be weakened, and people may begin to sell homes because their financial situation demands it. Because of this, home prices are bound to decrease. 4. Declining Consumer Confidence Consumer confidence has never been worse, and with each negative piece of news that’s released, it seems to continue dropping. Although many experts aren’t predicting a recession any time soon, most agree that the economy will continue its decline. 5. Frequent Foreclosures Foreclosures are now occurring at an alarming rate, and they are expected to continue. In 2019, 10.6 percent of all homes in the United States were foreclosed on.

3. By 2020, that percentage had risen to 11.6 percent. Although this number is expected to decrease to its previous rate over the next few years, it’s still a significant amount of home sales gone by the wayside. Real estate experts predict that as unemployment rates in the United States continue to rise, foreclosures in the United States will follow suit, ultimately leading to decreased real estate prices. 6. Homeowners Are Hurting When home prices start dropping, homeowners will no longer be protected by their rapidly increasing home value. Instead, they’re likely to begin feeling the damage much more frequently. A decline in the real estate market can have a sharp impact on an individual’s finances, especially if he or she is carrying an underwater mortgage. 7. Overpriced Homes Have Saturated the Market As interest rates continue to climb and home buyers’ confidence continues to decline, homeowners may become desperate for a quick sale and will drop their prices accordingly. As a result, home prices will decrease as people begin to panic and sell their homes. 8. Home Construction Has Reached Historic Lows In 2020, the number of housing projects in the United States dropped to 1.5 million, which is 500 thousand less than the 2019 average of 2 million housing projects. This number is unprecedented for a nation that’s been building an average of 1.5 million homes per year since the nineties. It’s estimated that in the next five years or so, there will be a home shortage of 3.6 million units in the United States; this will likely drive down housing prices even further because there are not enough homes being built to meet demand.

4. 9. Home Construction Has Been Adjourned As housing continues to drop and interest rates continue to climb, home builders may find themselves unable to afford their homes as well. If they’re unable to sell their homes, builders may be forced to abandon construction plans altogether, or they may let leverage get the best of them and go bankrupt. 10. Mass Layoffs Have Begun The housing boom wasn’t all that booming for many workers in the United States. As unemployment rates begin rising, more and more homeowners will be forced into foreclosure because they can no longer afford their mortgage payments.