Increased mortgage rates, a decline in home sales, and a record high price slowdown, all leads many analysts to believe a crash is soon to come. Mortgage rates have been over 7%(first time in two decades). Home Price has decreased 2.6% in August, and home sales has dropped 11% in September.
Some say this is the housing market getting ready to crumble while others believe it is just steadying out. During covid, the governments goal was to stimulate the economy. By doing so, mortgage rates were next to nothing. Today, mortgage rates are sky high in hopes to combat inflation(but isn't doing that great of a job). Since the 2008 crisis, economists have worked to fix what they did wrong in the past, so there is still hope for this second go around.
"the housing market boomed because of extremely low mortgage rates, intense competition bolstered by low inventory and remote work options, and soaring home prices."
https://www.google.com/amp/s/thehill.com/policy/3710099-is-the-us-headed-toward-a-housing-crash-experts-say-its-not-2008/amp/
It's interesting to see an alternative take on the housing market because of the lasting impacts of COVID, seeing as this article sees it as just steadying out rather than the potential crash that others see it as due to the home price and sales drop recently
ReplyDeleteI think it is interesting to see how economists will wokr to fix this situation due to their past experiences. Hopefully they can learn from their mistakes/first time and when the housing market starts to level out or take a turn for the better, they know how to respond in order to keep everything flowing smoothly.
ReplyDeleteThe article makes me doubt the effect of housing market on inflation. Well, I also believe that we are now reaping the disadvantage of government trying to simulate the economy when mortgage rates were next to nothing, and not allowing natural causes to take effect.
ReplyDeleteThe stress on the current housing market cannot be a repeat from the 2008 Financial Crisis as we have since implemented regulation preventing (or severely decreasing) the disbursement of subprime mortgage rates to those who do not traditionally qualify for mortgages. I would argue that the slow down in the housing market--although a significant portion of GDP--is not a result of a "crash" in the housing market so much as a cool down after the pretty extreme uptick in housing during the Pandemic as people were able to move further and further away from their job sites as remote work options remained an option in many fields.
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