Wealthy Living

6 Warning Signs a Big Housing Market Crash is Approaching

Many cities have seen a significant increase in home prices in the past year, up 20% or more.

The rapid growth in the economy has made some experts question whether the boom will last or whether we will see another bubble (and then burst) like the one preceding the 2008 housing crisis.

Eventually, bubbles will pop, and investors (in this case, homeowners) lose money when prices fall back to earth, hurting the overall economy.

Whether you are a buyer or a seller, the prospect of the housing market crashing is quite unsettling. You do not want to be responsible for an overvalued asset while the economy collapses.

Signs of Trouble for the Housing Market

1) Rising Interest Rates and a Greater Number of Houses for Sale

As interest rates continue to rise, this may indicate the impending collapse of the housing market. Several factors, including the current interest rate, contribute to lenders competing against one another to attract buyers.

2) Macro Economy Experiencing Pains

Housing markets are intensely local, not simply national, and regional variations can be huge, even within a block. Assess the neighborhood you're looking in at a more micro level.

But housing does not exist in a vacuum, though it may operate independently. Losing a job because of a recession could lead to people being unable to pay their mortgages, and this correlation is inevitable.

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