3 Reasons I’m Not Worried About A Real Estate Crash

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If you’re house hunting or just like to keep up with real estate news, you might know that mortgage rates are much higher these days than they were a while ago. one year old, or even at the beginning of the current year. That, combined with warnings of an impending recession, has some experts worried about a housing market meltdown.

The logic is that if borrowing becomes too expensive, buyers will start to pull out of the market. Once that happens and demand wanes, house prices could start to dip.

But I’m not stressed about a possible real estate crash. Here’s why.

1. I don’t see anything happening

For home values ​​to fall, we need a situation where the supply of available properties far exceeds the demand. But these days, the housing stock is very low, as it has been for more than a year.

As such, we are unlikely to see a short-term disconnect between supply and demand, even though mortgage rates are rising and could drive buyers away. If anything, what I can see happening is that house prices are gradually falling to more subdued levels – a very different scenario from a real crash.

2. I do not intend to sell

If you are planning to sell your home in the next year, you may want to list your property now when buyer demand is still very strong and home prices are on the rise. For my part, I have no intention of selling my house anytime soon.

On the one hand, I wouldn’t want to have to move my kids out of the neighborhood they know and love. Second, moving would likely mean ending up in a new school district. It’s something that I don’t think my kids would enjoy.

Also, I’m not motivated to sell right now because even though I might charge a generous price for my house, what I gain by selling, I will lose by paying too much for a replacement home. And since I’m not looking to sell my house, I don’t really have to worry about it going down in value.

3. I am not looking to exploit the equity in my property

Right now, American homeowners are sitting on record levels of home equity thanks to skyrocketing real estate values. If housing market conditions deteriorate, home equity levels are likely to fall, leaving homeowners with less borrowing power.

But I don’t care so much about the equity in my house because I’m not going to borrow on mine. I make it a point to keep plenty of money in my savings account for emergency expenses, so if an unexpected bill were to come up, the bank would be my preferred source of money – not a home equity loan or a line of credit (HELOC). As such, a drop in home values ​​probably wouldn’t limit my options when it comes to paying expenses.

It’s easy to see why some people might worry about a real estate crash. But I’m not worried about that happening. However, if you’re worried and thinking about selling your home, you might want to act fast to get this listing. Likewise, you may want to get your home equity loan or HELOC application as soon as possible if you plan to tap into the equity in your property. But otherwise, a housing market crash isn’t worth losing sleep over — not when it’s unlikely to happen any time soon.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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