The US housing slump will deepen as interest rates keep rising – but it's safe to rule out a 2008-style crash, say Zillow and Redfin analysts
as the steepest surge in borrowing costs since the 1980s continues to deter buyers.
That's because a majority of US homeowners are locked into low interest rates and don't face any pressure to sell - meaning the market may not see many distress sales. Also, unlike the current situation, the 2008 housing crash happened against the backdrop of a broader credit-market crunch.The total value of US homes fell 4.9% between June and December last year in the, according to Redfin.
But even against that backdrop, the housing market will not experience anything like the meltdown it experienced during the 2008 global financial crisis, according to Marr and Orphe Divounguy, senior economist at Zillow. "We don't have the stress sellers out there, this market pulled back because buyers decided to pull back, sellers also decided to pull back, which means inventory growth remains very sluggish. And until we get a big increase in inventory, there's some resistance on the price declines," he said.
"In today's environment, you have sellers that are locked into very low mortgage payments. In the US, we have a 30-year fixed rate mortgage, even my neighbor has a 2.8% mortgage rate," Divounguy said.Another factor that could prevent a housing market crash is migration, Redfin's Marr said, referring to homebuyers relocating to cities where costs are more in line with their incomes. That can support price stability as seen in states like Florida, he added.
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