Here are the reasons we were told (by year).
There is no shortage of doomsayers in the real estate industry. For the past 12 years, we’ve heard countless prophecies of an impending real estate market crash. Interestingly, the experts who forecasted these crashes have consistently been wrong. Let’s dive in and look at the reasons given each year, and why the market didn’t collapse as predicted.
2012: Shadow Inventory
In 2012, the ominous term “shadow inventory” sent ripples of fear through the market. This referred to homes that were in foreclosure or were close to it, and thus not yet on the market. But contrary to these fears, many of these properties were absorbed by an increasingly healthier market, stabilizing prices instead of tanking them.
2013: Higher Mortgage Rates
The year 2013 brought concerns over rising mortgage rates. However, the housing market continued to recover and grow. Higher mortgage rates did not discourage home buyers, instead, the promise of a growing economy stimulated more interest in homeownership.
2014: Quantitative Easing (QE) Ending in October
2014 brought concerns over the end of Quantitative Easing (QE), the Federal Reserve’s strategy to stimulate the economy. Yet, the winding down of QE didn’t lead to the anticipated crash, but instead marked a period of continued growth and stability in the housing market.
2015: Manufacturing Recession
In 2015, the manufacturing sector faced a recession. While some feared this would drag down the entire economy, and by extension, the housing market, the real estate industry proved resilient, remaining relatively unaffected by this sector-specific slowdown.
2016: Home Prices Got Back to Bubble High
In 2016, alarm bells rang as home prices returned to pre-recession highs. Yet, this wasn’t indicative of a bubble. Instead, it was a sign of a recovered market buoyed by stronger fundamentals, including improved lending standards and economic growth.
2017: No Good Reason
This year is interesting because no substantial reason was given for a potential crash. Yet, the doom and gloom persisted, highlighting the often unfounded pessimism that can permeate the industry.
2018: 5% Mortgage Rates
In 2018, 5% mortgage rates were deemed the harbingers of a crash. Yet, the historical perspective shows us that 5% is still relatively low, and the housing market continued to hold strong.
2019: Home-Price Growth was Cooling Off
Experts claimed the cooling off of home-price growth in 2019 would cause a crash. But a slower pace of price growth is often a sign of a healthy and sustainable market, not a precursory sign of a crash.
COVID-19 initially brought uncertainty and pessimism in 2020. But, surprisingly, the real estate market demonstrated remarkable resilience, with people placing more value in their homes than ever, leading to a booming housing market despite the pandemic.
2021: Mortgage Forbearance
In 2021, concerns arose over the end of mortgage forbearance measures. Despite these fears, the market continued to thrive as many homeowners were able to start making their mortgage payments again or sell their homes in a hot market.
2022: 7% Mortgage Rates
Higher mortgage rates were once again the fear factor in 2022. However, even with the rise in rates, the demand for housing remained solid, supporting the market’s stability.
2023: Historically Low Housing Demand
Finally, in 2023, the scare was historically low housing demand. However, even with fewer buyers, there’s still a balance with the number of sellers, leading to a stable market rather than a collapsing one. And if you’ve read any recent headlines, demand is back in a big way!
For more than a decade, we’ve seen fear and pessimism routinely find their way into market predictions. Yet, the real estate market has remained resilient, continually adapting to economic shifts and changes. As we move forward, let’s remember that while no market is crash-proof, the past twelve years have shown us that real estate is much tougher than some give it credit for. Here’s to remaining confident and clear-headed in our market analysis, even when confronted with the next big ‘market crash’ prophecy.