I last blogged about this in June – Don’t hold your breath for a housing market crash. Now we have a new incoming administration, the Federal Reserve has cut interest rates twice, and we are quickly approaching 2024 year-end.
Q: What is the state of the housing market now and what are the chances we’ll see a crash?
A: The housing market is stable and the chances of a crash are slim to none.
Let’s take a closer look at three key metrics of the housing market – Equity, Delinquencies and Unemployment.
EQUITY:
Existing homeowners enjoy home equity levels that are the highest of all time – A far cry from the levels we saw back during the GFC (Global Financial Crisis). High equity makes it less likely for homeowners to default on their mortgage loan because they have more options to avoid foreclosure.
DELINQUENCIES:
According to the NY Federal Reserve, the number of mortgage payments that are more than 90 days late is still near historic lows. Many were expecting this number to be much higher and to be honest, we should keep a close eye on this metric going forward, as it can quickly change. However, for the time being, and despite high interest rates and soaring home prices, delinquencies are at an excellent (low) level.
UNEMPLOYMENT:
Low unemployment strengthens the housing market by creating favorable economic conditions for buyers, sellers, and lenders. During the GFC, unemployment was much higher (over double), which led to a massive wave of foreclosures. Today’s employment situation is far better, with most homeowners having stable jobs that allow them to stay current on their mortgages.
Even though mortgage interest rates are relatively high and home prices continue to rise, the housing market is stable. If you’re in the hunt for a new home, you should not put your search on hold out of fear, or in the hopes of getting a great deal if prices crash. It’s pretty obvious from the above metrics that the housing market continues to chug along, albeit at a slower pace than we saw during the Pandemic.
Please feel free to reach out to me at Lakeside Bank with questions at your convenience. Happy house hunting!
Chart/Data source HERE.
