I think it’s safe to say the housing bubble will be crashing down in the near future. What can we expect, based on the previous bubble burst? What indicators can we see that it’s coming?
Real Estate (RE) can be geographically specific and I only care about buying a house in the location I want to buy it, so I’m more interested in the local market, although I imagine it will trend to some extent nationwide.
Interest rates have gone from 3.3% to 4.6% for 30-year mortgages and are only going higher. Additionally, since we’ve had a huge boom in recent years due to the historically low interest rates, it spurred homebuilders and luxury condo builders to start overbuilding. Those structures will be ready soon, increasing supply. That’s going to push downward pressure on prices.
What should we start looking for? Number of days on the market seems like a good indicator. Perhaps also finding 20 sample houses in the zipcode I’m interested in and tracking their weekly price movements on Zillow… did they sell? how many days on the market? how much are the sellers dropping the price?
Perhaps I could also look for number of foreclosures, but I’m not sure how to get that number easily. If I just use Zillow, the list could be incomplete and I won’t know by how much it’s incomplete (maybe this month it shows 80% of all foreclosures but next month there’s double the number of foreclosures but Zillow only lists 30% of them, so the total number looks like it trended down, but really they just weren’t listed on Zillow).
Do people still have ARMs? If so, does that mean about 5 years after the start of the most recent bubble, we’ll see a huge uptick in foreclosures as those sweet 3.3% rates reset to 6% in the year 2020?