Is the House Market About to Crash

Is the house market about to crash?

A key metric to answer this question is housing inventory levels.

US and Franklin, Tennessee Current Housing Inventory

Knowing the housing inventory determines if you are in a Sellers or Buyers market.

A sellers market has six months supply or less. A buyers market has six months’ supply of housing or more.

A key indicator of a house market crash is when there is too much inventory and insufficient buyers.

What is too much inventory? When there are six months or more of housing inventory available on the market, then you know you are in a buyers market.

Buyers Market

In a buyers market, prices are driven down. Sellers find it difficult to sell their homes for any price over market value. Sellers must sell below their expectations or wait in hopes that the market will shift back in their favor.

Sellers Market

In a sellers market, properties available are low. Multiple buyers are shopping for the same home. Home sale prices are driven up due to competition.

If you think you want to wait until the market is more in your favor for a short-term real estate investment, that might make sense. It doesn’t make sense if you are applying this thinking to your primary residence. Real estate is a fantastic long-term investment. If you plan on living in the property you’re about to purchase, it will work out in your favor in the long run, regardless of any short-term market changes.

The average annual home appreciation since 1991 is 4.4%. In addition to the appreciation rate, homeowners get substantial tax benefits. This doesn’t even include the biggest reason for investing in your home. Your lifestyle logistic needs far outweigh the price tag. The benefits of having a suitable space and location for you and your family are priceless.