What Will Cause the Next Housing Market Crash?

What will cause a housing market crash? A real estate crash may look like either a buying dream or a selling nightmare depending on who you are, but almost all of us can agree that the housing market is a little wild right now. Major news outlets have been telling us for months that a housing bubble is brewing and that a burst is on the horizon. But, with home prices still rising and demand not falling, how do we know whether or not housing market crash predictions aren’t just hype?

Dave Meyer (@thedatadeli), VP of Data and Analytics at BiggerPockets and “On The Market” podcast host is frequently asked, “when will we crash?” He’s heard so many differing opinions on the matter that he decided to compile all the data to see whether or not a crash or correction is on the horizon. Dave looks at housing supply, demand, interest rates, home prices, and more to conclude what could cause the next crash and when that could happen.

Are you anticipating a real estate crash sometime soon? If so, what data are you seeing that supports the crash claims? Let us know in the comments below!

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Check out Last Week’s Episode on Getting Ahead of the Housing Market:
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Data Sources Mentioned in This Video:
US Census: <a href="https://www.census.gov/en.html" target="_blank">https://www.census.gov/en.html</a>
FRED 30-Year Fixed Rate Mortgages: <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank">https://fred.stlouisfed.org/series/MORTGAGE30US</a>
Redfin Mortgage Payment Data: <a href="https://www.redfin.com/news/housing-market-update-monthly-mortgage-up-39pct/" target="_blank">https://www.redfin.com/news/housing-market-update-monthly-mortgage-up-39pct/</a>
MBA’s Weekly Applications Survey: <a href="https://www.mba.org/news-and-research/research-and-economics/single-family-research/weekly-applications-survey" target="_blank">https://www.mba.org/news-and-research/research-and-economics/single-family-research/weekly-applications-survey</a>
General Redfin Market Data: <a href="https://www.redfin.com/us-housing-market" target="_blank">https://www.redfin.com/us-housing-market</a>

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00:00 Are We Close to a Housing Crash?
01:40 Get Ahead of The Market
02:38 Housing Supply and Demand
03:33 Demand Isn't Going Down Enough
08:15 Supply is Staying Low
11:37 What Will Cause a Real Estate Crash?
14:23 Are We Entering Correction Territory?
15:57 All The Housing Data in One Place

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This Post Has 22 Comments

  1. Tyler Short

    Agree and disagree strongly with this video. Love bigger pockets but to completely ignore that the 17% decrease in demand TODAY has not even baked in the majority of the interest rates rising is completely disingenuous. You're also showing inventory levels through December 2021 when rates were still in the 3% range. Things have literally changed overnight. Inventory in my red hot market, Arizona, is rising. We've gone from ~5000 active listings to 7900 active listings. Historically we are at 16,000 but things are rising. It is costing me 40% MORE to buy a primary residence today compared to 4 months ago. I have ZERO interest in buying a property at all time inflated prices and to think that there aren't other young professionals like me saying the exact same thing is naive.

  2. Jeff Kung

    If the housing market “crashed” 10%, that would be absolutely nothing compared to 20% – 30% growth in the last year. The market in the past three years has been unsustainable and unhealthy due to excess liquidity.

  3. Jacob Zate

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  4. vishka07

    The chicken Game.

    Two crazy drivers compete to be the last to pull off the road before the two cars collide. Who wins is reckless enough to stay on the road even at the risk of crashing with the other vehicle, and clearly loses that coward (or chicken) who is forced to change his course for not having enough nerves to reach the end assuming all the consequences.

    In a sense, central banks and national governments are playing this calamitous game of chicken right now. On the one hand, the governments want the central banks to carry out a widely expansive monetary policy in order to relaunch the growth of their economies in the short term; on the other, the central banks intend to concentrate on fulfilling their mandate (price stability) and, consequently, they refuse to be instrumented by the electoral interests of the political elites of the day: on the contrary, they consider that those who have to take responsibility for promoting the economic growth must be the politicians, either through expansive fiscal policies or through supply policies (structural reforms). Both sides, then, are waiting for the other to make a move: although, for now, it seems that those who are beginning to blink are the central bankers.

  5. Daniel Parker

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  6. chaoscrane

    I have an erie feeling that this video won't age well…

  7. Zachary Sturbaum

    Incomplete analysis. Price is not only dictated by supply and demand. It also depends on supply of dollars. More dollars floating around, price of everything will rise. Supply of homes and demand for them can remain the same while more money gets printed and price will go up.

  8. bong boyz

    I purchase my first property (single house) for 595k at 3.93%. did I do good?

  9. Joshua B

    A housing crash is good, because it would allow normal people to buy houses to live in and discourage greedy investors from buying them.

  10. No Thanks

    The interest rate changes will impact the market 6-12 months from now. Larger interest rates will mean less buying power for the purchaser. In those HQOL areas, where homes are going above asking and in bidding wars, you will see less competitiveness and less interest in purchasing homes. 15% less finance applications today will turn into 40% less finance applications 5 months from now. Trends and financially informed people will influence the market. Just as I tell my friends to not finance or buy, so will others.

    Individuals will see that they can rent for 30% of the cost of a purchase. Renting will dominate those spaces, just from a financial perspective.

  11. clay

    -Mortgage rates have already crossed 5% and will touch 6-7% by summer.

    -Buyers who pre qualified at 3% are no longer qualified during closing now with 5% Mortgage rates

    -Foreclosure stopped for last 2 years will start hitting the market.

    -New construction supply will start hitting the market at the same time

    -The wall street ibuyers will start dumping their real estate purchases once they realize there is no more price appreciation left.

    -It takes just 1 house on the street to sell at 10-20% below asking to start the trend and pull values for the remaining "comps"

  12. SergeyCH

    We're officially almost in the recession. In the beginning of July things will turn the opposite direction. Expect massive layoffs and significant stock market crash which will lead to housing market crash. Then the food crisis and the WW3…
    Very optimistic. Life will turn to sh..t too quickly…

  13. Albert John

    Most times it amazes me greatly the way I move from an average lifestyle to earning over 63k per month, utter shock is the word. I have understood a lot in the past few years to doubt that opportunities abound in the financial markets, The only thing is to know where to focus.

  14. taramisuu

    if you end up being wrong, will you do a video admitting it?

  15. Smith allison

    Regardless of the economic fluctuation, I’m so excited I’ve been earning $45,000 from my $10,000 investment everyday 10days.

  16. ariana victoria

    Despite the economic downturn,I'm so happy☺️. I have been earning $ 60,000 returns from my $7,000 investment every 13days.

  17. Growingwiser

    Ok cool but…..do you think the sudden spike in popularity of ARMS loans are a concerning indication of anything? We all know very well that banks set up the deal then sell of the debt. The FED will try to control Inflation by driving up interest rates which is what we’re seeing right now. I believe a crash will happen uliltimately because the FEDs is in a pickle right now in a sort of a damned if you do and damned if you don’t scenario right now.

    Forbearances we’re a bandaid that made inflation skyrocket. So I would argue that we are all sharing the same sore hinies our infinitely wise leaders imposed on us.

  18. Bee Tee

    IMO, I don’t think it’s as simple as inventories rising= market values dropping. Another possibility is that demand could drop due to the lack of affordability. Wages are not keeping pace and interest rates may hit levels that eliminate large swaths of buyers, resulting in a decrease in demand dropping to meet supply, hence equilibrium and of course a drop in values.

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