Source: Nasdaq —
Are we going to see a housing bubble? According to new guidance from credit reporting agency Fitch, we may. In a recent release, Fitch analysts stated that the probability of a “severe downturn” in the U.S. housing market is on the rise. Home prices have fallen 10% to 15%, and housing activity has fallen by roughly 30%.
National Association of Home Builders Chief Economist Robert Dietz stated this week that we are in a “housing recession” due to “builder sentiment falling for eight consecutive months while the pace of single-family home building has declined for the last five months.” While the sizzling housing market has slowed down this year, here is why I don’t believe we will see a housing market crash like 2008.
Low supply and high demand
U.S. home values have increased by over 40% since the start of the pandemic. The dramatic escalation in prices was due to low interest rates, surging demand, and dwindling supply. As a result, housing affordability in the second quarter of 2022 has fallen to its lowest point since the Great Recession.
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