US Housing Market Crash 2018 2019 and Beyond

Housing Market Crash 2018?

Despite the strength of the US economy, growing employment and wages, a high number of investors and homebuyers are concerned about a housing market crash in 2018 or 2019.

Take a good look at the crash factors below and the national housing market forecast along with predictions for major urban housing markets such as San Francisco, Los Angeles, Miami, Houston, Seattle, New York and Boston.




Trump Volatility: No Telling Who He’ll Point at Next: Canada, China, Mexico? Trade wars can fester quickly like a wild fire.

Certainly the recent comments of the President that “Trade Wars are Good” don’t help settle the volatility in the stock markets. Strong inflation and cost of living rises, potential trade wars, along with high mortgage rates are serious threats.

In this post we try to take an objective look at the unthinkable. At least, it’s unthinkable for some that booming markets in Los Angeles, San Fransciso, Sacramento, San Jose, Seattle, Denver, Las Vegas, Dallas, Charlotte, Boston and Miami could possibly collapse. Is the Toronto housing bubble (worst in world now) the future for US cities?



Going back to 2007, did anyone suspect what was about to happen?

When Will Local Market Bubbles Burst?

If you look at the forecasts for all the bubbled up city markets such as San Francisco, San Jose, Los Angeles, Miami, Houston, Seattle, New York and Boston you’ll likely think back to prices before the last crash.

Are you spooked about the real estate market in 2018 or 2019? Is the market sufficiently over heated? When will interest rates become a problem? The recent jobs report was strong, although wages aren’t overheating. Supply is coming online.

Take a look at the 12 Top Crash Factors listed below do help decide whethery buying a house or rental apartment is still a wise decision.

Check the state of the US housing market right now and 2018 forecast.

The recent stock market correction gives us pause for thought about how volatility can factor into a housing crash. However, the housing market is healthy with construction rising and it will be a long time before demand is satisfied.

Mathematicians have studied housing bubbles, such as The University of Pennsylvania, and their HOUSING BUBBLE STRUCTURAL MODEL AND HYPOTHESES models couldn’t figure it out. The factors they studied do play a role, but housing bubbles and crashes are likely a cultural phenomenon (outside of major recessions).  It comes down to values, dreams and panic emotions.

There are some financial market players who make their fortune on crashes and if consumemrs are miffed about the direction of the market, it would be fertile ground for crash talk.

As long as Americans are employed with rising wages and growing GDP, housing crashes aren’t likely. Yet, a few experts such as Harry Dent are convinced a housing market disaster looms in the next few years. Even Anthony Robbins is speaking up about it in a video below.



A growing number of homeowners and buyers are talking housing bubble. With prices stable, economy strong, and demand persistent, why would so many feel the market could crash? Is buyer and seller pessimism enough to launch a sudden collapse?

Have a good look at the current housing market along with the residential markets in cities such as Boston, Houston, Seattle, Sacramento, and Los Angeles. If you or your family are considering buying a home or condo, it’s wise to understand the macroecomic and human factors.

There’s two camps on the 2018 crash issue. First those who see the unbelievable rate of economic growth in the US and believe it has to end; and secondly, those who see only positive signals and the solid political footing of the Trump administration in its resolution to bring good paying jobs and industry back to the US.

Even if the US is headed for greater things, it doesn’t preclude the possibility of a major market correction in housing. But for housing to crash, a series of factors would have to align.

12 Housing Crash Factors

  1. excessively high home prices via a price bubble
  2. increasing underwater mortgages
  3. fast rising interest mortgage rates
  4. slowing economy and sudden rises in unemployment
  5. wage growth not keeping up with home prices
  6. tax changes and geo-political shifts
  7. trade deal disturbance
  8. a stock market bubble and volatility
  9. high level of consumer debt affecting debt servicing
  10. cost of living rises
  11. risky low rate mortgages for new home buyers
  12. high oil and energy prices

We might add a very strong US dollar to the mix too. A strong dollar makes US exports too expensive thus threatening jobs here and making imports more attractive.

Even though the housing markets have substantial strength, the world is a very connected place. If China and other economies were to collapse, it might be enough to send the stock markets and real estate markets plummeting. Dent says New York, Los Angeles, San Francisco, Chicago and Boston are the riskiest markets.

What did say Mellon Bank’s expert say back in 2014, about the source of recessions?

2018 will be a big year: Economist from CNBC.

Neil Kashkari talks extensively about false prophets (Alan Greenspan) and the sources of market bubbles such as $100 barrel oil, and other uncontrollable situations.  He says market bubbles and crashes are very complex and the source is often completely unexpected. Could the oil sheiks take the US economy down again? Could China do it? Is the $20 Trillion debt a threat? Or is just the end of a bull run in the stock market?

However, in those cases where debt is fueling the asset value increase, a correction could trigger financial instability, because banks might take huge losses and potentially fail.” — Neil Kashkari.

If you’ve purchased a pricey home or condo, or you’re considering buying a property in the overheated Los Angeles housing market, San Francisco housing market or those in New York, Seattle, San Jose, San Diego, Portland, Austin, Houston, Charlotte, Miami, Dallas, or other hot real estate markets, you’re likely feeling some nerves of late.

The turbulence of the election, rising interest rates against overheated housing markets does give some plausibility to a US housing crash in 2018 or 2019. Proponents of an upcoming crash point to too many Americans living lavish lifestyles, still buying expensive foreign luxury cars on a $40,000 salary, while sitting on over-leveraged monster mortgages that could be subject to quickly rising mortgage rates.

In San Francisco, the risk of a bubble burst in 2018/2019 is highest and that city is ranked number 1 as highest for a crash. Prices in the San Francisco Bay area housing market are extremely high and if the tech sector does have an extended downtick with rising mortgage rates, perhaps the forecasted slide could start.

Top 10 Cities Most Likely to Experience a Housing Crash

From a report in AOL.com here are the top ten US Cities most likely to experience a crash:

  1. Portland, Oregon
  2. Charleston, SC
  3. Buffalo, NY
  4. Fresno, CA
  5. Los Angeles, CA
  6. Dallas, TX
  7. Salt Lake City, UT
  8. Austin, TX
  9. San Jose, CA
  10. San Francisco, CA

Interesting list, dominated by California and Texas, which have been doing well economically. With oil prices rising, I wonder if that will calm the situation in Dallas and Houston? A good number of people are inquiring about a Florida housing crash as well, yet Miami isn’t the whole Florida market.

Tyler Durden of zerohedge.com discusses in a post how homeowners are burdened in debt and unable to refinance their mortgages. He points to his key statistic that mortgage owners will not be refinancing their mortgages in 2017 which points in the direction of bubble bursts and crashes.

This chart below paints a very scary picture, that it’s worse than 2006.  Not only does it correlate 2017 with 2006, it shows that we’re up high on a dangerous cliff in some cities. However, most cities aren’t in this situation, so if a collapse in California, New York and Texas were to occur, other cities might survive okay.

There are other mitigating factors too such as the strengths in the economy, foreign investors buying property, and rising optimism and confidence since Trump won the election.  At this point, we’re wondering if Obama and Clinton are relieved not to have to face the mess they created? Trump seems to be up to the task and yet, he has purportedly said he would enjoy watching the crash, even if it takes down some of his real estate empire. Is this just a comment on high home prices?

The cost and availability of credit provide fuel for a bubble to inflate, inviting even less experienced, or less credit-worthy players into the game, all of whom believe they will sell their recently purchased assets at ever-increasing prices — from a CNBC post.

That credit is being freed up in 2018/2019, but will it fast enough to create huge instability if mortgage rates don’t rise precipitously? Here’s Seattlebubble’s reasoning on why we may not be in a housing bubble/crash situation:

  • still lots of all-cash buyers, with few zero-down buyers
  • no crazy neg-am, fog-a-mirror, interest-only home loans like last time
  • interest rates remaining low
  • affordability index not as bad
  • buyers and lenders more cautious

Home prices aren’t as high as they were in 2006/2007 and mortgage rates are much lower:





No one will dispute that there are big risks but for 2017, everything looks to be under control.

Are you looking for the best cities to invest in real estate? The top 80 cities to buy rental properties gives you a peak at the potential of rental property investment.

Is this the right year to buy a rental income property?  What are the best investments in 2017 and is investing in real estate a wise decision?

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Disclaimer: this post/information is meant as a discussion of housing and investing issues, ideas and trends, not as advice for investment. Please use good judgement and professional advice if you’re investing in any market whether stocks or real estate.

Home Loans and Mortgages – The Lowest Rates Possible

Compare Lowest Home Mortgage Rates

How Much Could You Save By Shaving 1 to 2 points off Your Mortgage?

Getting a Lower Mortgage Rate might be easy.  Shaving 1 to 2 points off of your mortgage is a great idea. The charts below tell you it’s possible, very doable, and a smart home financing choice.

Homes are expensive and you need to save money anyway you can. This is where you start, by looking for the lowest mortgages rates available.

Whether it’s our job, auto insurance, current home, and our lot in life, there are those who believe staying put is okay. However, staying with your current provider could be costing your tens of thousands.

Ads by RateSupermarket.ca

Save your money by checking out several mortgage rate quotes below.




mortgage-sign
Image courtesy of Brooklin Mortgages.com

In fact, corporate profits rely on you staying put and not comparing mortgage rates or auto insurance rates.





But the mortgage rate quote, auto insurance quote, refinancing rate etc. you currently receive is likely not all that competitive. It’s a good time to refinance or shop around for an entirely new mortgage solution. Get the system working for you.




Mortgage Rates Canada

Major Canadian Bank Mortgage Rates
Term Length Fixed Rate Best Rate
1 Year 3.49%
2 Years 3.29%
3 Years 3.74%
4 Years 4.09%
5 Years 4.99%
7 Years 5.49%
10 Years 6.19%
Lowest Mortgage Rates in Canada You can Find Below
1 Year 2.69%
2 Years 2.84%
3 Years 2.69%
4 Years 2.89%
5 Years 2.69%
7 Years 3.44%
10 Years 3.74%

Mortgage Rates USA

Major USA Bank Mortgage Rates
Long Term Fixed Rate Best Rate
1 Year 4.0%
2 Years 4.0%
5 Years 3.375
7 Years 4.0%
15 Years 3.625
30 Years 4
Lower Mortgage Rates across USA You can Find Below
1 Year 3.83%
2 Years 3.92%
5 Years 4.18%
7 Years 4.06%
15 Years 3.28%
30 Years 4

Do it for Your Spouse and Family: Savings Are Smart

And sure, you’re not always looking for rock bottom rates, but you likely are paying premium rates for low quality mortgage loans.

Make Finding lower mortgage rates a priority right now, and you’ll save a lot of money. Consider how much savings translates to a 5, 10, or 20 year mortgage and it’s tens of thousands of dollars.



Saving Money on Your Mortgage – Is Money in Your Bank Account

With the money you save, you can buy a new electric vehicle, or take a vacation to Costa Rica or the Canadian Rockies.  You can turn your mortgage rate search into a real adventure.

That money is yours. You worked hard for it. Count how many hours and days you had to toil in your job to earn that money. See what I mean? People are penny smart and dollar stupid. It’s part of our culture.

Financially wise people on the other don’t get duped when they shop for a mortgage or their auto insurance. It’s your money, get full value for it. You can’t earn as much as you can save, unless you’re Donald Trump. Oh wait a minute, the President has filed for bankruptcy many times.



You’d better shop around. According to a report from Consumer Finance.gov, 77% of consumers apply to only one lender when seeking a mortgage.

You can Save a lot of Money just by Shopping for a Better Mortgage Rate

There are some particularly important tactics you can use to lower your mortgage payments. Here’s 10 good ones:

  1. search on Google – the top ranking websites are there because people like them
  2. get quotes directly from bank websites – compare them
  3. clean up your credit score – make extra big payments for many months to show your intent to pay down your debt. Bank credit score rating expectations are ludicrous, created only to justify charging high mortgage rates
  4. don’t leave your current job until you’ve landed that long term mortgage successfully
  5. check out the mortgage rate quote tools below
  6. use a mortgage rate calculator and crunch some numbers yourself – at least it’ll be harder for lenders to pull the wool over your eyes
  7. talk to your current provider and ask for a much lower rate – tell them you’re unhappy and intend to get a cheaper mortgage
  8. take a shorter term home loan, let’s say 3 to 5 years – it’s risky however it can you a cheaper rate
  9. take the bank’s teaser rate on a short term then shop for a better one when that expires
  10. check out a mortgage broker, many of whom advertise online. They’re eager to compete and they’ll do more to offer that lower rate and better terms

All you need to do is search for a lower mortgage rate. The offers are plastered all over Facebook, Google, Bing, news websites and even a blog like this one. How easy can it get!

Is the Forecast for Higher Mortgage Rates? 

Some are warning about inflation and fast rising interest rates are about to go out of control starting in 2018.  Rather than jump at the first fixed rate mortgage offer, shop around.





This forecast shows mortgage rates might go down so you an bargain effectively with this outlook.




 

Mortgage Rate History and Forecast 2018

Mortgage rates are expected to rise, and mortgage shoppers are looking for the lowest rate 30 year mortgages. That’s smart considering how low rates are currently. The sooner you find a good 30 year fixed rate mortgage the better.

This chart from FreddieMac shows 30 year fixed rate mortgage rates since 2013.

1 Year Adjustable Mortgage Rate is Climbing

Mortgage Loan Options – Which the Best Mortgages?

While the lowest mortgage interest rate is one of the primary criteria home buyers take into account, there are other financial and real life issues you need to prepare for. Ensure you check out these popular and vital mortgage loan benefits.

  1. fixed or variable rates
  2. open mortgages
  3. long term loans
  4. amortization periods
  5. payment schedules
  6. skip a payment




Free Mortgage Calculator

Enjoy this mortgage calculator to estimate payment costs.

Mortgage Payment Calculator – Canada

Mortgage calculator by ratehub.ca

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Mortgage rates from Lending Tree. Lending Tree’s mortage rate inquiry process is a bit nasty. I include it just to let you know that not all online mortgage lenders are high quality and they may not see inquirers as human beings.. They will ask endless irrelevant (to you) questions that don’t relate to a simple mortgage rate request (just give us the rate) and some of them you may not like at all. Just warning you that many of these companies, and banks don’t want to give out mortgage rates freely any longer. They may not feel they’re competitive or they’re more interested in capturing your email address and asking very personal financial questions.




Homes.com Offers Their own Mortgage Calculator

Mortgage Calculator

Should You Use a HELOC to Lower Your Debt Payments?

Should I use HELOC Calculator by MortgageLoan.com

 

It might be tough to sell your home in its current condition so you’ll need to research with the help of your real estate agent, which types of home improvements make the best sense. If you’re considering selling your house, congratulations, it is a good time to sell. The market is high and it’s still rising which means home buyers see value in purchasing your home. It should sell quick whether you’re in Los Angeles, San Francisco, Seattle, Phoenix, Denver, Dallas, Boston, Miami, Vancouver, Toronto or New York.





And after you do sell, you can think about the joy of travel or to buy cheap international properties. What a great time of life it is for you.

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