5 Reasons Why the Housing Market is Unlikely to Crash

The housing market is one of the most critical sectors of the economy. The events of the 2007-2008 financial crisis still haunt many Americans, and the mere mention of a housing market crash is enough to send shivers down their spines. However, according to March 2023 data, the Florida housing market is unlikely to crash. Here are five reasons why:

1. Low Months of Supply: According to March 2023 data, only 2.9 months’ supply is available. This scarcity of inventory explains why many buyers need to bid over the listing price. According to the law of supply-demand, it is predicted that home prices will remain stable for now.
2. Low Newly Constructed Housing Supply: The supply of newly constructed houses has yet to return to pre-2007 levels. Also, there’s no way for homebuyers to buy land, get regulatory approval, and increase the supply quickly.
3. New Buyers Entering the Market: There’s a strong demand for homes across various demographics. Millennials and Hispanics are in their prime buying years. As a result, there’s still a limited amount of inventory available.
4. Strict Lending Standards: There were several cases of liar loans in 2007 where anyone could get a mortgage without a credit check. Today, mortgage lenders in Florida place high standards on borrowers, and most home buyers are required to have an excellent credit score.
5. Fewer Foreclosures: A majority of homeowners own significant equity in their homes. The personal balance sheets of homeowners are much stronger today than they were 15 years ago. As a result, the threat of rising foreclosures in Florida is low.

Florida Housing Market Predictions 2023

The housing market majorly depends upon the economy’s health. As economies slow, the money supply becomes limited. It becomes difficult to borrow money, fewer home buyers enter the FL housing market. However, due to Florida’s high inbound rate, its housing market will still see a slight upward trend even during the slow months. Florida’s job market is also strong. The unemployment rate is at 2.6%, remaining stable as it was in January 2023. The private sector’s over-the-year job growth rate was 4.6%. Here are a few real estate housing market predictions for 2023 based on the experts’ forecast.

1. Mortgage Rates Stabilizing at 6 to 6.5%: The 30-year fixed-rate mortgage averaged 6.27% for the week ending on April 13, 2023, down from 6.42% the previous week. However, these rates are still lower than last year’s peak of 7.08%.
2. Fewer Home Sales: Realtor.com’s report predicts far fewer home sales in the remaining quarters of 2023. Compared to last year, home sales will plunge by 18.8% in Q2.
3. Low Home Prices: Home prices will remain low compared to last year, falling by 2.5% in most markets.
4. Stable Housing Affordability: According to NAR’s chief economist, rates will remain stable for existing homes during 2023, and approx 4.78 million existing homes will be sold.
5. iBuyers Likely to Buy Homes Below Market Value: During the past year, house flipping profits have fallen by 18.4%. Top iBuyers like Opendoor reported huge losses last quarter. Lastly, Zillow and Redfin shut down their iBuyer services in 2021 and 2022.

-Max