According to a recent LendingTree survey, a sizable portion of Americans believe the once-booming housing market is about to see a significant crash.
What Happened: 41% of Americans, according to the survey that was originally reported by the New York Post, believe that the housing market will collapse within the next 12 months.
Comparatively speaking, only 25% of respondents said they believed the industry would escape a crash, and 34% said they were unsure.
74% of those anticipating a crash think it will be as catastrophic as, or worse than, the housing market collapse that occurred in 2008 during the Great Recession.
Read also: Here's Where Morgan Stanley Bets The Housing Market Goes In 2023
According to 33% of respondents, a forecasted crash would be caused largely by inflation, 24% by increasing loan rates, and 16% by a lack of affordable housing.
This year, the housing market's conditions have gotten worse as rising mortgage rates kill buyer demand and compel sellers to decrease their asking prices. Despite a recent drop, the average mortgage rate, which is still more than twice as high as it was in January, is 6.31%.
Why It Matters: According to LendingTree senior economist Jacob Channel, the housing market is more stable now than it was before the Great Recession, despite growing consumer apprehension.
“Today’s homeowners are in a much better position to continue to make their payments, even if we enter a recession,” Channel said. “It’s important to note that the reason why the market crashed in 2008 was because there was diminished demand for homebuying and a massive influx of homes hitting the market due to high foreclosure rates.”
However, the economist pointed out that drops in home prices of 5% to 10% appear plausible in many markets across the nation.
“While I do think the housing market will continue to slow over the next 12 months and some people may end up underwater on their mortgages as a result, a major crash doesn’t appear likely — at least not at the moment,” Channel said.
According to some experts, in the upcoming months and years, the reduction in property prices will be more severe, potentially falling by 15% from recent levels.
Instead of attempting to time the market, many investors are using a new strategy to invest in rental properties with as little as $100 to apply dollar cost averaging to real estate investing and generate passive income along with long-term appreciation.
To read about the latest developments in the industry, check out Benzinga's real estate home page.
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