Here’s why you don’t need to be concerned about a 2022 market crash.
A few clients have asked me this question recently: Should I prepare for a real estate crash next year? When they ask me about a real estate crash in 2022, the first thing that comes to mind is the great real estate crash of 2020 and that there wasn’t one. Due to the pandemic, markets were locked, people were out of work, it was illegal to show homes in person in many states, and plenty couldn’t carry on doing business, and yet, there was no real estate crash.
The Federal Reserve is buying over $40 billion worth of mortgage-backed securities, which are home loans and refinances. One of the ways to know what’s going on is to ask the Fed when they’ll stop doing that or change that. In their recent meeting, they said they aren’t changing anything.
The biggest thing that could cause a 2022 crash would be a massive increase in mortgage interest rates. However, the Fed said they aren’t going to double or triple rates, so as long as that holds, you don’t need to prepare for a crash.
Another reason to prepare for a crash is if supply and demand majorly change. For that to happen, we’d need hundreds of thousands of new properties hitting the market, then we’d need a million foreclosures, then a slew of new distressed property companies would have to start up and hire an array of people to do all that work, and finally, there would have to be a complete end to mortgage forbearance. Currently, none of that is happening. For you to worry, the federal government would have to stop being active in the real estate market, and legal restrictions on foreclosures, evictions, and forbearance would have to be entirely lifted.
As long as people of all ages love and yearn to have their own home, the market will be good. To have a real estate crash in 2022, rent, scarcity, low rates, government action and regulation, and legal issues would all have to change. However, everyone is hungry for more homes right now.
As always, feel free to reach out to me via phone or on my website if you have questions about the possibility of a crash or real estate in general. I love speaking with you, helping you, and hearing your feedback.