A majority of Americans fear that the once-booming housing market will face a major downturn in the coming months, according to a recent survey by LendingTree.
According to the survey, 41% of Americans expect the housing market to collapse in the next 12 months. By comparison, only 25% of respondents expected the sector to avoid the crisis, while 34% said they were not sure.
74% of those expecting a crash believe it will be as bad or worse than the housing market crash of 2008 during the Great Recession.
About 33 percent of respondents said inflation was the most important cause of the projected crash, with 24 percent citing high interest rates and 16 percent citing a lack of affordable housing.
Conditions in the housing sector have worsened this year as rising mortgage rates dampen buyer demand and force sellers to lower listing prices. Mortgage rates have fallen in recent weeks, but still average 6.49% – more than double what they were in January.
Despite growing fear among consumers, the housing market is much more stable than it was before the Great Recession, according to Jacob Channel, senior economist at LendingTree.
“Today’s homeowners are in a much better position to continue paying their bills, even if we’re in a recession,” Channel said. “It’s worth noting that the market crash in 2008 was due to a large influx of homes into the market due to reduced demand for homes and high mortgage rates.
“Right now, we have less demand for new homes, but not a huge influx of supply, which puts us in a much better position,” Channel added.
Still, Channel noted that a 5% to 10% drop in home prices in many markets across the country “seems reasonable to me.”
“I think the housing market will continue to slow over the next 12 months, and while some people may find themselves underwater on their mortgages as a result, there doesn’t appear to be a major crash – not at all if not now,” Channel said. .
Some experts say the fall in home prices could be even more dramatic, falling 20% from recent peaks in the coming months and years.
Millennials were most likely to predict a housing market crash — 44 percent of respondents in that age group said they thought a crash was imminent. Baby boomers were the least worried, with 35% predicting a crash.
Economic fears are not limited to homeowners. 61% of renters say that their monthly rent is more expensive than it is or should be, based on their experience.
Rising housing costs, the main driver of inflation, eased slightly in October but are still well above the Federal Reserve’s target. An inflation update for November will be released next week.
As The Post reported this week, U.S. home listings were taken off the market at a record clip in November. Redfin experts found this trend surprising with homeowners receiving lower-than-expected interest rates and lower offers from low-cost buyers.