Analyzing the Potential for a Housing Market Crash

The speculation surrounding a potential housing market crash has been a topic of concern among prospective homebuyers as property prices continue to soar despite elevated mortgage rates. According to recent data from the National Association of Realtors (NAR) and the S&P CoreLogic Case-Shiller home price index, home prices have consistently risen, marking the ninth consecutive month of year-over-year increases.

Despite expectations for a housing market correction, fueled by the slowdown observed in late 2022, the trend has defied expectations, with home values steadily climbing. Lawrence Yun, NAR’s chief economist, emphasizes the concerning disparity between home prices and income levels, highlighting the challenges faced by first-time buyers. The shortage of housing supply remains a key factor contributing to the relentless rise in prices, with inventory levels remaining critically low.

Experts such as Rick Arvielo from New American Funding and Skylar Olsen from Zillow acknowledge the imbalance between supply and demand, foreseeing further price escalations in the foreseeable future. However, they caution that these trends exacerbate affordability issues for aspiring homeowners.


The surge in mortgage rates to unprecedented levels in 2023 failed to dampen home values, underscoring the resilience of the housing market amid challenging economic conditions. Despite this, analysts predict that any potential correction is likely to be modest, with no expectation of a crash similar to that experienced during the Great Recession.

Dave Liniger, founder of RE/MAX, highlights the impact of fluctuating mortgage rates on market dynamics, suggesting that a significant decline could trigger renewed interest from buyers, further driving up prices. While some localized markets have seen minor declines, the consensus among experts, including Mark Fleming from First American Financial Corporation and NAR’s Lawrence Yun, is that widespread price drops are unlikely.

Reflecting on past housing market downturns, economists emphasize several factors that mitigate the risk of a crash. Strong lending standards, demographic trends favoring homeownership, and muted foreclosure activity contribute to a stable market outlook. While affordability concerns persist, the consensus remains that the current housing boom is unlikely to culminate in a catastrophic bust.

While the housing market continues to face challenges, including affordability constraints and supply shortages, the prevailing conditions suggest that a crash on the scale of the Great Recession is improbable. Economic fundamentals and market dynamics point towards a more balanced and resilient housing market landscape, providing reassurance to buyers and homeowners alike.

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Staff Report

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