Many Americans may be worried about a real estate market crash. They are concerned about the impact of the coronavirus pandemic on housing prices. The 2020 stock market crash has worsend those fears. Is the housing market next?
In April 2020, the National Association of Realtors surveyed its members.1 About 90% said the pandemic has reduced home buyer interest. Of those, 60% are simply delaying their purchase for a couple of months. Almost two-thirds of buyers (63%) expect lower prices.
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Full article:
https://www.thebalance.com/is-the-real-estate-market-going-to-crash-4153139
For sure there are certain areas with bubbles. The definitions of "bubbles" also depend on many factors and is influenced by many things - some of which are in a lot of flux due to the current health crisis.
Forbarence + 0.25 % interest rate + median house price above 300k + unemployment rate of 8.4%. with feds printing more treasury bills...sustainanance is questionable.
Housing bubbles have a direct impact on the real estate industry, but also homeowners and their personal finances. The impact a bubble can have on the economy — e.g. on interest rates, lending standards, and securitization practices —can force people to find ways to keep up with their mortgage payments when times suddenly turn and get tough. Some may even have to dig deeper into their pockets, using savings and retirement funds just to keep their homes. Others will go bankrupt and foreclose.
Warning Signs of a Crash
Prices in the housing market follow this tendency for mean reversion, too. After periods of rapid price appreciation, or, in some cases, depreciation, they revert to where their long-term average rates of appreciation indicate they should be. Home price mean reversion can be either rapid or gradual. Home prices may move quickly to a point that puts them back in line with the long-term average, or they may stay constant until the long-term average catches up with them.
You want to see a real bubble come here to Australia where the prices are more than twice as high as USA (like median prices over $1 million) but the government keeps pushing them up and up and everyone just keeps buying in case they miss out. USA is dirt cheap to us, outside of San Francisco and Manhattan. I have even thought of moving to USA to get the bargain basement housing.
@Joe Flood . As long as the collateral value does not shrink while interest rates are in check, there need not be a bubble. Australia could be witnessing a genuine demand drive. But if the government is pushing up the prices; and not the buyers, then it could be a matter of concern.
I would not compare USA to Australia or any two different countries in Housing price bubbles as their fundamental GDP/debt ratios vary along with many other variables such as fiscal policies, unemployment, median incomes, etc..
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