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Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Remember the housing bubble, real estate market crash, and Great Recession in 2008?
I do. It was an utter nightmare for me and millions of other property owners, representing the second-largest recession in American history, junior only to the Great Depression. Given that a real estate bubble largely caused it, many Americans worry we’re experiencing another Housing Crash in 2023.
I get it. Median U.S. home prices skyrocketed 40.4% in the three years from January 2020 to the same time in 2023. Frothy looking numbers, raising concerns about a housing bubble in 2023. Fears exacerbated as hundreds of cooling real estate markets have already lost value since mid-2022.
Here’s what the data shows about whether a real estate bubble is about to burst — and exactly how housing bubbles work in the first place.
What Is a Housing Bubble?
To better understand if there’s a real estate bubble in 2023, we need to first understand what exactly a housing bubble is.
A housing bubble forms when home prices rise higher than the market’s fundamentals can justify. Fueled by speculation rather than inherent demand for housing, these artificially high property values prove unsustainable over time.
Imagine a neighborhood that appreciates steadily for eight years in a row. Speculators notice, and begin offering a premium for those homes greater than their market value, increasing demand. In turn, homeowners begin selling at inflated prices because of the increased demand. Homebuyers start scrambling to buy into the neighborhood, worrying they’ll get priced out if they wait any longer.
At a certain point, demand dries up because no buyers can afford to pay the inflated prices. The artificially high prices come crashing down, thus causing the bubble to “pop.”
Sure, there are other factors that can contribute to a housing bubble, but this general outline offers an idea of what a housing bubble is.
Housing Bubble Timeline
Going a step further, real estate bubbles typically go through four predictable phases.
Phase 1: Properties in Demand
It starts with a market where people actually want to live.
The housing demand is real, and causes prices to rise faster than the surrounding areas. That begins to attract both speculative investors and homebuyers reaching beyond their comfortable price range.
Phase 2: Expectations of Appreciation
In the second phase, excitement and high expectations begins spilling into the decision-making process. Buyers assume that prices will continue appreciating at the current faster-than-average rate.
That assumption of future growth, rather than market fundamentals like local incomes, fuels higher pricing. See the circular logic?
“I’ll pay more for this property because I know future buyers will soon pay even more.”
That sense of buying frenzy spurs developers to build ever more supply as well. But it takes time to build homes and apartment buildings, often measured in years, which means developers fall behind the market fundamentals.
Here’s what the housing market cycle looks like visually:
Phase 3: Inflated Purchase Price
When demand starts becoming fueled by the expectation of price increases, rather than by local residents desire to move in and their ability to afford it, home prices start inflating artificially. Some buyers reach beyond their comfortable budget, aided by low-down-payment loan programs and loose income requirements.
And it works — for a little while. It creates a self-fulfilling prophecy, a feedback loop of higher prices fueling more demand with the expectation of further appreciation.
It doesn’t last.
Phase 4: The Bubble Bursts
Once homebuyers and speculators realize it costs more to live in the neighborhood or city than it’s actually worth, demand begins to dry up. Prices stagnate briefly, then when sellers can’t find a buyer, they lower their prices. It happens slowly at first, but once it becomes clear that there’s no demand at current pricing, demand falls even further.
Some homeowners end up underwater on their mortgages as prices fall. If they start defaulting on their loans, a wave of lower-cost foreclosures hit the market, driving prices even lower.
Investors don’t want to touch the area, and homeowners won’t either until prices drop enough for them to feel like they’re “scoring a deal.” Which eventually happens: prices go so low that the neighborhood becomes attractively priced again.
And the cycle starts anew.
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Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
Housing Markets Crashing
Housing Markets Crashing
Housing Markets Crashing
Housing Markets Crashing
Housing Markets Crashing
Housing Markets Crashing
Housing Markets Crashing
Housing Markets Crashing
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips
Housing Markets Crashing
The real estate industry is highly competitive, and staying ahead of the curve is a must for professionals who want to succeed. RE Training Shop is an online platform that provides real estate agents, investors, and hobbyists with a comprehensive range of digital products, training, resources, and tools that they can use to stay on top of their game. The RE Training Shop is a one-stop-shop for real estate professionals looking to enhance their skills and knowledge in the industry. Mm tips