According to a new LendingTree survey of over 2,000 U.S. consumers, an estimated 44% of Americans think the housing market is at risk of crashing in the next year. Surprisingly, 35% of Americans actually want the market to crash, with some non-homeowners believing it’s the only way they could afford a home.
Most Americans aren’t optimistic about the housing market, with 44% expressing concerns about a potential crash in the next year. Notably, 36% of homeowners and 35% of Americans overall express a desire for the market to crash. While 51% of homeowners don’t want a market crash, 15% of them see it as an opportunity to lower property taxes, and another 15% believe it could lead to future stability.
Mortgage Rates and Homeownership Dilemmas
Mortgage interest rates add to the worry, with 53% of Americans concerned about high rates. 79% expect rates to rise for at least another year, and 27% believe mortgage rates will be 8.00% or higher one year from now. The impact is visible as 50% of homeowners feel their current rate is keeping them in their houses.
Generational differences are evident in perceptions, with Millennials being the most concerned (52%) about a market crash. Interestingly, 36% of homeowners want the market to crash, particularly driven by property tax reduction (15%) and anticipated future stability (15%).
The Hope and Skepticism of a Housing Market Crash
LendingTree Senior Economist Jacob Channel expresses skepticism about the desire for a market crash. While acknowledging the high home prices and mortgage rates, Channel emphasizes the potential negative impact on the overall economy if a housing market crash were to occur. He points out that while home prices falling is possible, the associated risks may outweigh the benefits for most individuals.
Despite the potential consequences, 32% of non-homeowners believe a downturn is the only way they could afford a home. This sentiment is more pronounced among Gen Zers and Millennials, with 39% and 38% respectively sharing this belief.
The Outlook for Mortgage Interest Rates
While the average rate for a 30-year fixed mortgage is 7.50%, 53% of Americans worry that rates will remain high. Jacob Channel suggests a potential decrease in rates next year due to factors like cooling inflation. However, he cautions against expecting a return to the exceptionally low rates seen in 2020 and 2021.
Homeownership Challenges: Feeling Stuck with Low Mortgage Rates
Homeowners with low mortgage rates, especially those with kids, feel stuck in their houses (50%). The belief that 2020 and 2021 presented a unique opportunity for homebuying is widespread, with 75% of Americans unsure if they’ll ever see rates as low again.
While the desire for a housing market crash exists among some Americans, experts caution against underestimating the potential negative consequences. The delicate balance between affordability and economic stability requires careful consideration. As perceptions vary across generations and homeownership statuses, navigating the complex landscape of the housing market remains a challenge.