During the great recession, there was a horrendous housing market crash that affected Americans in many ways. When a housing market crashes there are a variety of reasons as to why. One reason is that young adults old enough to buy houses are not stable enough to afford one. With the increase of age for children staying home with their parents, and the baby boomers beginning to fall, a housing market crash may not be too far away.
Housing prices have now exceeded pre-crisis levels
Currently, in national levels, housing prices have now exceeded pre-crisis levels. This phenomenon can be clearly seen on the U.S home price indexes. The average home sale price right now is even higher than the price during the Great Recession!
When a housing market is crashing, there are tell-tale signs. One of them is companies extending their loans to individuals with low and poor credit scores. This is very similar to what happened the first time, twelve years ago. Another sign is the impossibly low down payments being offered by banks all over the United States. While this can be worse, it is not preferred.
What can bring down a housing market?
Wells Fargo is currently offering a 3% down payment for mortgages and accepting individuals with FICO credit scores 620 and lower! The use of these tactics from big companies is what can bring down a housing market. Because banks and institutes are lending money to those who do not have enough to pay for the house, the individual is left at the mercy of the increasing interests rates.
Workers may be laid off to keep up with financial burdens
Job security is another largely important thing that is affected by the housing market crashing. Some jobs do not have security when housing markets crash and workers may be laid off to keep up with financial burdens. The only way you would be okay during the recession caused by the crash is to stabilize your job.