Will The Housing Market Crash in 2022?

Will The Housing Market Crash in 2022?

hello guys welcome back to another video in today's video i will be talking about a very important question that has been being asked by a lot of buyers just a lot of people out in the market that are we in a housing bubble right now is this housing bubble going to pop and when is it going to pop so there's a lot of those all those questions are bunched in together but like a lot of senior economists in this country or just as us humans do is that when something happens to us in the past we think about it and make conclusions off of that and most of the time we think that thing is going to happen again so for us to answer this question let's look at what happened in the economic crash or the housing crash that happened in 08 which which started back in the early 2000s and late 90s so during that time definitely there was economic expansion happening it was a dot-com era a lot of jobs were being produced and people were buying houses at very very very very high prices it was the peak of the market we can say it was the peak of the market then because we saw what happened and we we people that were buying these houses uh were also getting loans on these houses uh with zero down minimum equity there was a lot of malpractice and fire travel practice being happy that was happening in the mortgage business and banks and people were just getting loans by just signing their name on the paper and then following that you saw that the economy went into a job loss economy where people started losing their jobs because a lot of the companies that were surfacing in that time the dot-com era if you look them up i mean some of them don't even exist in today's time there was there were companies people were getting office buildings left and right but nobody really knew what the company did so that was also happening with the whole credit boom and fall practices and then once uh people had a job loss they were not able to make their mortgage payments because first of all they weren't even qualified for their mortgage payments and then banks took on these large mortgages that now they had to somehow figure out how to pay and then they put it back on the market but they couldn't recuperate because there were not enough buyers to buy it because nobody really had the right jobs or the money to buy so then you know what happened it's all cyclical it was a it was a nasty cycle and boom the market crashed so um that's what happened then so now let's let's see what's happening right now currently in the market to make some conclusions so right now we did notice that prices have gone drastically up in the last one year um in some places like in some cities of arizona almost a 30 to 35 percent increase in just one year even here in some of the cities uh in california locally here in the bay area you have been seeing that crazy price increase um but what you are also you probably know if you're in the market is there are the mortgage industry right now and what's happening in the mortgage world is that these mortgages are being lent to people but there there is fair lending going on paperwork is being checked guidelines are being followed but here's what's really different from what was happening in the past crash people are putting more down payment whereas in the past people were getting these mortgages at pretty much zero down or just very very low equity now that's not happening and on top of that people are borrowing debt at a very very low rate and low cost not only just the purchase loan applications but we've in the last seven to eight years we've seen two times where the rates have gone down we saw it a couple years back and then now we're seeing again in the last two years so even people that had bought debt at a higher rate have refined and lowered the debt so housing debt service payments as a disposable income are at all time lows that means we are people have more of cash flow and their debt that they have borrowed has a really low payment and currently there are about 10 million jobs in the economy and almost half of them need to be fulfilled after what we saw in kovid a lot of those people a lot of companies had job losses then they're rehiring and then also new jobs of surfacing those are the stats and we are seeing that starting of this year there's been economic expansion not only is inventory starting to come back slowly which we'll talk about in a second but a lot of these job openings are surfacing well now you can argue that well there was a lot of jobs that were surfacing back in the early 2000s if you looked at the jobs that are surfacing right now who are the big players let's just take example in the bay area we have apple google amazon um a lot of these medical companies that are building a surgical robotic products that do surgeries on you dna companies that are working on your dna if you did research or you just ask yourself the products that are coming on the market right now or the viable products that these companies are actually producing are the actual good products compared to what we saw in the early 2000s where companies were just surfacing out of nowhere you can argue that these are actual tangible real products that are changing and and and moving things in industries companies like tesla so when you compare uh that time to this time i don't feel that we are in a we're gonna go in a job loss economy and late cycle lending or late cycle buying when you're buying at the peak which we don't know if this is the peak yet but we we knew that back then it was a peak because we saw the crash happen when you're late cycle buying or late cycle lending from a lender's perspective it's very dangerous when you enter into a jobless economy because that can cause a big crash and that is not a sign right now from what we just discussed about what kind of jobs are surfacing right now and how strong the job market is so hence i don't believe that the bubble is about to crash but then again things can happen that we had no idea are going to happen as we saw in the year before it didn't cause a crash to happen because the government stepped in and also there were companies that were really helping employees retain jobs so we all worked as a country to hold ourselves up but there's not to say that things may not come in the future but right now looking at these trends and looking at where the job market is where the demand is what type of buyers are out there where the lending practices are there are no signs of eminent crash or a bubble bursting in the near future now what's going to happen beyond this time we will assess it again but right now this is what uh these are my two cents and i feel like we're not headed into a crash now we're probably wondering what's causing all the demand right well as i've mentioned in my previous videos as well that construction was already low since early 2014 and 13.

After the crash happened construction companies really didn't want to bear that risk again so they slowed their construction down they never really revamped their construction in tangent to where how the population was growing but now when 2020 happened everything just went on a whole construction completely slowed down buyers lost faith and then we just relapsed where buyers just woke up like hey home from work environment blah blah so you already had demand there and then you have more people coming in the market homes not being produced long enough seniors not putting their homes on the market and then you have the youngest population that the number is from 29 to 33. us right now has the the youngest population out there and this population has the most cash they have rsus they have stocks and these are the people that are the working class and these people if they can afford a home is just american culture if you can afford a home you're not going to rent as as you see in other countries a european country where people prefer to rent so all of this has caused the demand to rise now answering back to the main question is right what's going to happen is are we going to go in the crash i don't believe we're going to go into crash crash in in the near future but i do believe that prices may cool down a bit once we start to see more inventory that's it for today guys i hope this was insightful helpful if you enjoyed today's topic leave me a comment share this video because i love to hear from you until next time this is karen singh from optimal homes

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