Lead Lag Live: Housing Slowdown or Crash
After nearly two years of strong performance, the housing market is slowing down. That’s being seen across the board, from longer times on market to a rise in price drops.
And new housing construction has slowed out as well, even amid an overall shortage in most major markets. The question, then, is whether this is just a slowdown after two above-average years, or a crash.
Housing is a massive driver for construction and labor growth. When looking at housing components, for every home built, about 3 jobs are created. That has a big impact on the economy.
And most Americans have a high percentage of their net worth in home equity. Today, homeowners are sitting on a record amount of equity.
That’s a big change from the days of the housing crash, when many homebuyers had to put little or no money down. With stronger lending standards in place, the chances of a housing crash occurring from rising foreclosures seems off the table for now.
The housing market is also facing a shortage in supply as demand remains strong, and as construction jobs and retraining for such jobs remain slow. Adding in rising investor demand for housing, and it’s clear that there’s been some demand in housing pulled forward during the past two years. All told, these all point to a slowdown, rather than an outright crash in housing.