Are we headed for a housing crash?

Jun 13, 2022

The media has been throwing around the idea that we’re headed for a housing crash. But is this really the case?

To answer this question, we need to look at the number one law of economics: supply and demand.

Demand is measured by Household Formations, meaning someone is occupying a new property without relinquishing or selling one, like a kid who’s moving out of his parent’s house for the first time. Right now, in the US there are 1.4 million households being formed per year.

Then we have supply, which comes in the form of new construction. Here we look at Housing Completions, or homes ready to move into, which currently equals 1.2 million, after counting for those being replaced.

This means that demand for homes remains greater than available completed inventory or supply, which bodes well for home prices being supported.

What does appreciation look like in your area? Contact a local advisor today.

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