Housing Market Crash in 2022? Will it Happen?

Real Estate Crash 2022?

Will We See a Crash in the Real Estate Market? What Will Happen Next For Home Sales? When Will we see Home Prices Drop? Hello and thank you for watching…this is Wayne Turner. I’m a real estate broker here in Metro New Orleans. The information is derived from my 25 years of broker real estate and has sold more than 4,000 homes. Enough about me…Let’s Go! You would think the overall economy would run hand in hand with stocks, bonds, and commodities & they do to some extent However when it comes to real estate, houses, homes people live in it’s not as simple as a buy one day sell the next. Houses is not driven by corporation. It’s you and me, your neighbor who own homes, and make the decisions of weather or not the price needs to be lowered. Not a company or a board of directors. It’s homeowners and home builders who make the decision as to what price to sell their homes. Ultimately the only way to truly discover if your home is overpriced is if no one buys it. And this is why it takes so much longer for the US housing market to see a shift. It often takes months for homeowners to realize that the price of their home may be overpriced. Allow me to explain. As a real estate broker we place homes on the market. As for myself I always share with my clients every sold home that is the most relatable home to their home.

But here is where I do things different. I show them the data in real time, full photos, on a computer. Not a black and white piece of paper. The difference? By just looking at a piece of paper you as a homeowner have no idea to the details of the home we are comparing your too. Unfortunately this is what causes homes to be over priced and then they sit on the market, the inventory accumulates, it takes months before these homes to sell and often times only after multiple price drops. So, this is why I explain it takes months for the housing market to truly realize the buyers are not willing to pay the prices. Until we see buyers drastically decrease the purchasing of homes and the inventory of homes drastically increase we will continue to see above average home value appreciation. And look just like I mentioned homeowners do not get together at a board meeting to discuss pricigntheir homes, buyer sdo not have board meetings to discuss when they will stop buying and when is the price to high. This is done on a hyper-local location basis. Every housing market is different. It’s exhausting hearing all these data junkies fear mongering consumers into thinking were going to see a housing crash. There are not enough homes for sale to crash.

It takes months to see a shift in housing.

Regardless, will we see a housing crash in the very near future.

No!

The last housing crash was fueled by millions of homes that were purchased by buyers who were simply no approved.

These buyers were given loans in what was called subprime lending. Meaning many people were able to buy homes without cash, proof of income, proof of a job, and very low credit. They were then given an adjustable rate mortgage and of course, when the rate went up so did their payments.Now those loans are few and far between and havn’t been part of the lending process in some 13 years. Bottom line people buying homes now are well qualified to pay their mortgage and the rates are fixed. As long as there is a demand and the inventory is low home prices will increase.Look at home prices in New Orleans. In 2019 the average sales price was $232,000 today, 3 years later it’s $337,900 Most would say oh yeah that’s a bubble! And with stocks taking a dive & the S&P seeing crazy changes one couldn’t help but look for real estate to do the same. However, in order for that to happen, We need a fast influx of homes to hit that market that out number the buyers buying. But this is what makes the housing market so different from the financial sector. Houses are made of individuals who actually live in their homes and it’s no secret people have chosen to stay in their homes longer But you can’t help but look at the property value spikes $50,000 to $100,000 a year jump in home prices and be concerned of a housing bubble.

Now getting people to stop buying homes as mentioned would get prices to come down but that will take some time. In an effort, the US government will be raising mortgage rates beginning in March 2022 to slow down consumer spending & with talks of rates hitting 4% one would think that would slow down consumer spending but I personally don’t think it’s going to slow things down. There are still far too many 1st time buyers, novice investors 1st time investors, corporate REIT buying properties. Now we will see more houses hit the market based on the decades of historical data of the Spring housing markets. In addition, we will see more bank-owned homes hit the market as the Federal government released the foreclosure moratorium in July 2021. Now if you are not familiar with the Foreclosure moratorium it was put into place in March 2020 that states a mortgage company could not evict or Foreclosure on a home for lack of payments. Fast forward to July 2021 & that moratorium has been lifted. Meaning we are beginning to see more homes hit the market. Now the same can also be said for home buyers as we roll into the spring homebuying season. There is always a huge surge of home buyers. In addition, as people hear of buying a home & making $50,000 in two years it makes buying a home pretty appealing. We’re seeing people buy outdated homes, paying market value for the home, then remodeling and selling it for a profit within 90 days. It used to be you had to buy a home for far less than market value to make a profit. What we’re seeing today is most people would rather buy a turn key and just move right in.

As far as home prices, what goes up must come down right? Well that depends on how fast you need to sell or how long you can wait. It also depends on your local housing market. Those area that see huge increases and sharp declines such as pockets of California and Florida will be the first to witness the hit. Now I personally believe it will be 12-18 months before we see a normalization of the housing market. Now I’m hearing everyone shouting home buyers are declining. Buyers have stopped looking for homes and to that I say…It happens every year. January and February are always historically the slowest month for home purchases. Home sales have declined but it’s not because the buyers are not wishing to buy it because there are fewer homes to buy.There are over 1 Million Licensed real estate agents in the US and 910,000 properties on the market. That’s less than one listing per real estate agent. Inventory in New Orleans (where I’m located) is 89% lower than it was 2 years ago. Literally over a 42% drop each of the past two year.But the million-dollar question is will the market crash as we experienced in 2008? I don’t think so & here is why the housing market is much slower to react as opposed to the immediate buying and selling of stock, Bonds & Commodities. Homes are owned by individuals, not corporations. Homes are individually owned by people and when people are ready to sell they price their home according to what other homes in their immediate area sell for.

Now when you place a home on the market like anything you sell if no one shows interest it’s the first indicator that the price may need adjusting to attract more buyers. This is when we see houses begin to come down in price when buyers no longer feel the home is worth what the seller is asking As long as buyers are buying homes at this rapid pace with the current prices we will not see a crash. The factor in this is home buyers are not locked into massive mortgage rates and most importantly the tightening of home loan prices & doing away with Subprime loans over the last 13 years. Bottom line the people who purchased homes over the past 13 years had to be very well qualified to afford their homes.

So is it a good time to buy? Yes if you feel as if your PMT will fit your budget- you must know that the home you buy will be the home you’re likely to live in for the next 5-8 years if not more.

Most people that bought homes in 2005 & 2006 before the crash were still able to sell their homes 5 years later for a profit. My only concern is marketing when you see huge spikes and huge drops in home prices.

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Housing Market Crash in 2022? Will it Happen?

Real Estate Crash 2022?

The last housing crash was fueled by millions of homes that were purchased by buyers who were simply no approved.

So is it a good time to buy? Yes if you feel as if your PMT will fit your budget- you must know that the home you buy will be the home you’re likely to live in for the next 5-8 years if not more.

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