The trillion dollar question we are getting asked is: When will the market crash?
“Tomorrow is a mystery, yesterday is history, and today is a gift. That is why they call it the present.”
– Master Oogway, Kung Fu Panda
Tomorrow is a mystery, but we can look to the past for guidance. The graph below shows how homeowner equity has made a tremendous comeback since the 2008 housing crisis.
Looking at the graphs below, we can see that in 2011, total homeowner equity was $8.32 trillion, however the total mortgage debt was $13.5 trillion. In other words: homeownership nationwide was underwater! That is a scary piece of data.
In 2022, after years of more responsible lending, low rates, real estate appreciation, and yes – inflation, Q2 of this year counted just over $12 trillion in debt and a whopping $29 trillion in homeowner equity. Today, home equity has massively outpaced mortgage debt.
So what does this mean?
It means that it is unlikely that a crash will occur. As rates continue to increase, people who have secured low interest debt over the past decade are going to sit tight. Sure, life events will always make for turnover in the housing market, but not enough to drastically increase inventory and drastically change pricing in the short term. Lack of inventory means (you guessed it!) good properties are still moving quickly.
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