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September 16th, 2018 by Simon Campbell
Housing Market Predictions 2018 And 2019
Will the US housing market crash in 2020? Ask most investors what they think about the housing market today, and they will most likely cringe out of habit. The reality is that the US housing market in 2018 is making a recovery, a quick and expected one.
Before we get into why the US housing market is looking good as of right now, let’s remind ourselves how the housing market got such a bad rap in the first place, shall we?
As the twenty-first century came along, many people pounced on land as if it were going out of style. People snatched up acres upon acres of real estate, as is human nature, because you can never have too much of a good thing right?
Wrong. In 2008 we all watched the bubble pop. We all looked on as years of badly thought-out policies, affordable housing acts, and an uninformed consumer base reached a bursting point, and burst in the faces of millions of people. This was not just a contributing factor to the second largest recession in American history, but in the eyes of Americans everywhere, a sign of danger. The great housing market she giveth, and the great housing market she taketh away.
If there’s anything we should remember as a collective society, it’s that history always seems to repeat itself. From 1970-1990 the average cost of a home in America had quadrupled. To the average American, the US housing market was a great thing that seemed to keep getting better. Everything has peaks and falls, valleys and cliffs. And although the market was just in shambles, it will and has already begun to rise from the ashes.
As of right now, the Federal Reserve is keeping short-term rates near zero percent. This alone is great news for potential investors, let alone the fact that the Federal Reserve is also buying longer-term bonds and mortgage securities in the secondary market. This powerful tonic of reparative measures is keeping rates artificially low across the board. In addition to this, banks are finally starting to loosen their standards for mortgages again, and while no-money-down deals have gone extinct, borrowers with decent credit are getting financed more easily.
Are These Mortgage Rates Good?
How about the fact that houses are an average 30% below their peak and in many cities it’s less expensive to buy than to rent. Add to this that mortgage rates are still hovering near all time lows and it’s no surprise that many home builders have reported that quarterly sales are up by thirty to forty percent. Banks are not selling as many foreclosures as they used to, and cash investors are scooping up many homes, and converting them to rentals. The cost of renting a home is going up as well, making buying a home seem like a more feasible option right now. The prices of existing homes around the country rose from ten percent in February, and once the spring buying season goes into full swing, the prices should rise even further. To consolidate all your debts you can refinance your mortgages. That will be a great financial move if it is planned and executed carefully.
Housing Market Predictions 2020
What is the next housing crash prediction? Even though the housing market likely won’t be the cause of the next recession, an economic downturn would still have an impact on the US real estate sector. The housing market in the U.S. could enter a recession in under five years, with Zillow predicting that it will occur in 2020. The spillover to the housing market will rely upon the profundity, length and severity of the 2020 recession and, if some parts of the country feel the effect worse than others, some local housing markets could see further effects. “The current economic expansion is getting long in the tooth by historical standards, and more late-cycle signs are emerging,” said Scott Anderson, chief economist at Bank of the West, who was among those predicting a 2020 recession.
According to a survey published by WSJ, some 59% of private-sector economists surveyed in recent days said the the economic expansion that began in mid-2009 expansion was most likely to end in 2020. An additional 22% selected 2021, and smaller camps predicted the next recession would arrive next year, in 2022 or at some unspecified later date.
In a research report in which Zillow surveyed 100 real estate experts and economists about their predictions for the housing market, it disclosed that almost 50% of all survey respondents said the following recession will initiate in 2020, with the first quarter of the year referred to the most as to when the recession will start. The main culprit for the housing recession: monetary policy. The experts predicted that monetary policy will be the deciding factor this time around. In particular, they argued that the Federal Reserve could prompt slower growth if it raises short-term interest rates too quickly. To put it simply, the US housing market is ripe for investment in 2018, making it a great time to buy investment property.
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