Home buyers waiting for housing market to crash, and it’s possible

Potential home buyers would be hoping the US Federal Reserve continues its historic interest rate hikes when it meets next week—it might just send the housing market crashing.

A vast majority of Americans—78%—expect the housing market to crash soon and hope to purchase a home if it does, per a survey by ConsumerAffairs.

Those who plan to buy have saved an average of $29,504 for their home. That’s nowhere close to the median home price in the US, which stood at more than $412,500 in July.

All going north
Mortgage rates are also surging. In July last year, they were below 3%. This year, they’re hovering above 6%.

Most renters—more than 70%—also believe a crash could drive down rising rents, which increased by an average of $327 within the past year, according to the survey.

And with housing costs showing a rise of 0.7% in August, up 6.2% y-o-y, the Fed has good reason to continue its aggressive rate hike of 75 basis points next week, says strategist Marvin Loh.

But then…
“Interest rate hikes can lead to higher mortgage rates, which could cause people to think twice about buying a home,” writes CNN’s Nicole Goodkind, adding that continued rate hikes “could risk crashing the housing market.”

There are reasons to suggest the Consumer Price Index (CPI) report on housing “lags what’s actually going on in the market, and that housing prices could already be on their way down,” Goodkind writes. But “we’re nowhere near a market collapse.”