By Joe Gomez
A lot of consumers have a very gloomy outlook about the market due to news of mass layoffs, high inflation, and rising credit card debt, according to a new survey that shows 41 percent of Americans believe the housing market will crash next year.
The survey was conducted on more than 2,000 American consumers by LendingTree.
Other discoveries by the online loan marketplace were that millennials are the most likely generation to agree a housing market crash is coming (44 percent), while baby boomers (35 percent) are the least likely.
The majority of Americans (74 percent) who believe the housing market will crash in the next year think it will be as bad or even worse than the 2008 collapse.
Those who believe a crash is coming believe inflation will be the biggest driver (33 percent), with high interest rates (24 percent) coming in second.
“It just depends on the part of the country that we’re talking about, so I don’t think you can brush a wide swath of the nation with the same data,” said Andre Burris, a realtor in Denver, Colorado. “For example, in Denver and other similar markets, there is still a desire to buy homes.”
Among other worries for consumers are rising mortgage rates, which concerned 58 percent of Americans. Those the most concerned about rising mortgage rates were looking to buy a home (83 percent) and individuals from Generation Z (68 percent), the survey says.
“The rate you get on your loan is one of the biggest determining factors for how expensive your mortgage payments will be,” says LendingTree senior economist Jacob Channel. “The higher your rate, the more you’ll end up spending. Rates have risen so dramatically this year that many new would-be buyers are finding themselves priced out of the market.”
As dismal of a picture consumers may paint next year to be, Channel argues even during a recession he doubts we will see a “crash.”
“While I do think the housing market will continue to slow over the next 12 months and some people may end up underwater on their mortgages as a result, a major crash doesn’t appear likely—at least not at the moment,” he says. “With that said, I do think that home prices will probably come down next year. As of now, 5 percent to 10 percent declines in many markets seem reasonable to me.”
Though the survey revealed a lot of fearful consumers, there were some optimists. A quarter (25 percent) of Americans don’t think the housing market will crash next year. Instead, the majority believe it will happen in the next two or three years.