With home prices and mortgage rates soaring, it would seem that something has to give.
So it may not surprise you to learn that 78% of Americans expect a housing-market crash, according to a study by Consumer Affairs, a consumer information service. What may surprise you is that 63% of those surveyed want a housing crash.
Perhaps that’s because 75% of respondents said they plan to buy a home if the market crashes. And on average, they said they have $29,504 socked away to purchase one.
Generation Z (born 1997-2012) is the most eager for a crash, with 84% hoping for one. Gen Zers have saved the least for a home: $15,601 on average.
“Their smaller savings might be due to their age (they’ve had less time to save) or the drastic rent increases many have faced recently,” the study said.
When Crash Might Come
Of those expecting a crash, 36% of respondents expect it this year, 49% next year, 7% in 2024 and the same amount in 2025. More than half of baby boomers (born 1946-64) believe 2023 will bring a housing crisis.
As for which cities would be among the first to crash in a housing crisis, 33% of respondents said Austin, Texas; 26% said Atlanta; 24% said Bakersfield, Cal.; 23% said Los Angeles; and the same amount said Albuquerque, N.M.
If a recession hits, 65% of respondents said they would have to sell their homes. And 82% are worried that a housing crash would leave them owing more for their homes than they’re worth.
For those who think they would have to give up their home, 79% said they would downsize, while 21% said they would turn to renting.
Renters Worried About Mortgage Rates
Looking at renters, 91% of them fear that increased mortgage rates will price them out of the homebuying market. The 30-year fixed mortgage rate averaged 5.22% in the week ended Aug. 11, up markedly from 2.87% a year ago, according to Freddie Mac.
Meanwhile, more than 25% of urban respondents think rent increases won’t slow down, even if the housing market crashes.
Rental information service Zumper’s National Rent Index hit a record high in July. The median one-bedroom rent totaled $1,450 in the month, up 2% from June and 11.3% a year earlier. The two-bedroom median rent hit $1,750 in July, also up 2% from June and up 9.3% from July 2001.
Meanwhile, renowned online real estate brokerage Zillow (Z) foresees weakness ahead for the housing market. It anticipates that revenue from its platform serving real estate agents (Premier Agent) will drop 21% this quarter from a year earlier.