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Housing Market about to Crash

The past couple of years has seen an immense rise in every element of the housing market. This has been true throughout the world, especially in the USA, Canada, and New Zealand.

Yes, other markets also saw an increase but remember there are leverages in this market available that are beyond any other. To explain it further, in the first eighteen months of the pandemic there was a moratorium on payments of rent and mortgages which resulted in automatic improvement of credit scores for every one.

In addition to this, large stimulus checks were being issued along with low-interest mortgages available to everyone. This made an individual buy more than usual in terms of quantity and value.

This was further pushed by low inventory as many of these houses were bought by the platforms like Zillow by creating special funds. And at the same time, new construction was not happening as the construction costs were going up continuously.

Now all of these factors are reversing with double the speed they got created as all central banks hike rates at the fastest speed in history. This has resulted in higher payments whether mortgages or rents leaving no or much lower at disposal.

But the actual problem is now that the inventory is rising of new and old homes due to an increase in sellers that are getting pressured by the payments which are only going to go up in the near term.

Most likely in the next two quarters, it should be able to create enough pressure on sellers that they start selling desperately leading to a large correction in prices. This would coincide with Fed selling its MBS that it collected in QE4 that would get sold at a loss.

Hence a perfect recipe for the housing crash 2022 or 2023.


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