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What Factors Will Lead To a Market Crash?

Monday, October 24, 2022   /   by Chelsea Hilderbrand

What Factors Will Lead To a Market Crash?

These four factors will cause today’s housing market to crash.

Is real estate crashing? To answer this question, let’s take a look at four different factors that will lead to a market crash:

1. Unaffordable housing. The cost to own a home will have to decrease by about 40% to be the same as the beginning of 2022, which was already somewhat unaffordable. 

“More people have more debt now than when the market crashed in 2008.”????

2. Rising housing debt levels. Currently, we are sitting at $4.45 trillion of non-housing debt. Additionally, there’s $11.7 trillion of housing debt. If you take a look at where things were in 2008 when the market was crashing, we had levels of $2.7 trillion of non-housing debt and $9.9 trillion of housing debt. There has been a huge increase. More people have more debt than when the market crashed in 2008.

3. Surging inflation. Bills for groceries, gas, and everything else are going up. It used to be that you could spend $100 at the grocery store to feed a family. Now that bill is about $300. It’s crazy!

4. A contracting economy. The Fed is increasing interest rates and using quantitative tightening to curb inflation. The trouble is, it’s also slowing the growth of companies. There are fewer hires in the short term, but there will be layoffs in the long term. 

In future videos, I’ll discuss when to expect the crash and what you can do to prepare for it. Call or email me with specific questions you’d like to hear on my next videos, or let me know if we can individually take a look at your situation. I would love to be your real estate consultant!