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(Lauren, private client adviser at Fairmont Equities, “How a Housing Collapse Will Affect the Stock Market,” pg online @ https://fairmontequities.com/how-a-housing-collapse-will-affect-the-stock-market/ //ghs-ef)

There has been talk of a housing bubble for many years now. With households highly leveraged, a significant increase in interest rates or high unemployment may have dire consequences on borrowers’ ability to repay their mortgage. But if there was a housing crash, how would this affect our stock market? Firstly, we are not predicting a crash in house prices. However, it is smart to be aware of the ramifications, if indeed there is a severe downturn. This means we can be well placed to take advantage of the opportunities that may arise. A housing crash will decrease the home values if home owners are unable to pay off their mortgage repayment and a mass of foreclosure sales hit the market. This may lead to a recession which means consumers will have less money to spend on goods and services and this will slow corporate growth. This is the primary effect of a housing market on the stock market. Companies which rely on consumer spending will see a decrease in earnings and this will also decrease the share price. The real estate sector creates jobs in the housing construction sector. Therefore, while we have a thriving housing environment, we can continue to employ people in these jobs. The construction industry employs 8.9 per cent of all those currently employed. If there was a decrease in housing construction, it will increase the unemployment rate. If unemployment rises, spending consumption will also decrease. A housing decline will also affect households not employed in the housing sector. The net wealth of households will decrease if housing prices decrease. Therefore, the amount of equity homeowners can extract from their homes will be reduced. This will further limit their ability to spend money. Banks may tighten their credit requirements on loans and may ask for larger deposits for home loans. Home buyers may need to liquidate their stock positions to facilitate this. We may see increase selling activity in the stock market for that reason or investors may liquidate their positions to get quick access to cash. Industries which will be directly affected are financial services, home building companies, home improvement companies, furniture manufacturers, durable goods. Banks will take a hit from the bad loans. Stagnate growth in the housing market which affect all property stocks and property home improvement stocks. Property development and renovation will not be as popular during a housing collapse. Consumers will be less willing to buy expensive items such as white goods and expensive handbags.

The challenges posed by climate change are fast emerging as one of the primary concerns for firms, investors and governments. The banking sector is considered an influential intermediary within the economy, capable of mitigating the economic risks arising from climate change and promoting a shift toward a low carbon economy. This study examines the corporate response of major banks in South Africa to the problem of climate change. It employs two different assessment metrics to evaluate the nature of the climate actions taken by these banks and evaluates the quality of these actions in comparison with international banking benchmarks

Climate change poses a major risk to the global economy: It affects the wealth of societies, the availability of resources, the price of energy and the value of companies. At the same time, the need to revolutionize the way we use energy opens up a new universe of options for economic development and social benefits.

The financial industry has a two-fold responsibility. On the one hand, it needs to prepare itself for the negative effects that climate change may have on its business and on its customers. On the other hand, it can significantly help mitigate the economic risks and enter the low-carbon economy by providing appropriate products and services.

Shifting to climate-change resilient economies will not be achieved only by governments building dams, improved water systems, and similar large-scale infrastructure. As with the move to a green economy, effective adaptation, in a systemic sense, will only occur if the millions of dispersed business decisions taken every day start to account for climate change factors and impacts. Within the group of private sector decision-makers, representatives of the financial services sector – banks, investors and insurers – stand out in the commercial landscape essentially because of their ability to effectively influence business practice and emerging trends in the real economy: Their daily engagement with clients and investees of all types and sizes and across virtually all sectors of the economy shapes the current and future reality of production processes and services. As such, the financial services sector can be a powerful conduit towards economic systems that are better prepared for the challenges of climate change.

A financial services sector that understands climate change and pro-actively drives adaptation is not only in the highest interest of broader economic stability and the societal well-being it underpins; it is clear that it will increasingly be in the very interest of financial institutions themselves. Banks, investors, and insurers that get ahead of the curve in understanding and managing the risks linked with the physical impacts of climate change will build a strong competitive advantage relative to lagging competitors. The central role of financial institutions in advancing the climate resilience of societies is not only a matter of leverage and necessity, but also a matter of ability and expertise. Adapting to climate change boils down to identifying, quantifying, pricing, and mitigating the financial risks linked with climate change impacts: Risk management is and has always been core to the business of all financial institutions. The key point is that effective risk management requires appropriate information input on all parameters that are relevant for business as well as forecasts of the future development of such factors.

Without a strong financial sector, i.e. a sound number of diverse banks, private equity companies, insurers and a stock exchange, our economy will do much worse. The financial sector is a condition for a healthy corporate sector and development of the real economy. Likewise a strong financial sector is needed to facilitate the transition towards a more efficient, clean and green economy. It is simply foolish to believe that this transition will ever be realized without finance. Obviously banks and other financial institutions still have to proof their social usefulness to many. The reputation of bankers is terrible. However, anybody who promotes the transition towards a sustainable economy should quit bashing bankers and look for new ways of cooperation. Hopefully the fact that politicians are worrying about the future of the Amsterdam Stock Exchange is a signal that the mood around the financial sector is changing. The sector still has a lot to improve. But we should all realize that we are better off with a financial sector that can still do better, than with no financial sector at all.

This is bad news. After all, the housing market overheats every decade or two. If the system is stable enough, it can cool off without catastrophe. Now, however, the trillion-dollar overnight repo market in housing mortgages is so large that, when the housing market retreats, financial stability could be threatened. Existing reforms do not adequately mitigate this risk, largely because they depend on the authorities and the banks to complete a complex and untested repayment process within 48 hours of a bank’s collapse. This would be extremely difficult to achieve if multiple banks failed simultaneously. In the face of a housing crisis, it is plausible that lenders would again panic, deciding that they cannot depend on untested processes to stabilize the banks and withdrawing their overnight loans. Banks, stripped of cash, would then cut lending, as they did in 2008 and 2009, plunging into a recession yet again. The grim irony here is that, prior to such a shock, preparing for restructuring encourages lenders to provide more overnight loans. This expands the overnight market, makes mortgage lending easier, and increases the costs of collapse. This is not mere speculation. Most observers of the mortgage market believe that its growth accelerated in 2005, after Congress exempted mortgage bonds from most bankruptcy procedures – a move that would eliminate waiting time for repayment. That change convinced mortgage lenders that their activities were ultra-safe: they no longer even had to worry about the quality of the borrower. When crisis struck, that confidence quickly faded, and investors fled.

In recent years another strand of research has emerged, which, rather like the political economists of yore, attributes many long-standing economic ills to land. It explores how high and rising land prices affect lending, investment and ultimately productivity, and much of it looks closely at China’s long property boom. The worrying conclusion is that high and rising property prices can also have damaging economic effects, by crowding out productive investment and leading to a misallocation of capital. In the most extreme cases, inflated land prices may already be the cause of a protracted slowdown in productivity growth.

Real estate is the largest asset class in the world. In 2020 it made up around 68% of the world’s non-financial assets (which includes plant and machinery as well as intangibles, such as intellectual property). Land, rather than the structures built on top of it, accounts for slightly over half of that 68%. As values have ballooned, the share of land in non-financial assets has increased sharply in some countries (though few report the data). In Britain, for instance, it went from 39% in 1995 to 56% in 2020.

(Kimberly, president of World Money Watch, M.S. in Business Management from MIT and M.S. in Social Planning from Boston College, “How Does Real Estate Affect the U.S. Economy? Why Buying a Home Helps Build the Nation,” , Snider)

Real estate plays an integral role in the U.S. economy. Residential real estate provides housing for families. It's often the greatest source of wealth and savings for many families. Commercial real estate, which includes apartment buildings, create jobs and spaces for retail, offices and manufacturing. Real estate business and investment provide a source of revenue for millions. In 2017, real estate construction contributed $1.07 trillion to the nation's economic output. That's 6 percent of U.S. gross domestic product. It's less than the 2006 peak of $1.195 trillion. At that time, real estate construction was a hefty 8.9 percent component of GDP. Real estate construction is labor intensive. That's why a drop in housing construction was a big contribution to the recession's high unemployment rate. Construction is the only part of real estate that's measured by GDP. Real estate also affects many other areas of economic well-being that aren't measured. For example, a decline in real estate sales eventually leads to a decline in real estate prices. That lowers the value of all homes, whether owners are actively selling or not. It reduces the number of home equity loans available to owners. They will cut back on consumer spending. Almost 70 percent of the U.S. economy is based on personal consumption. A reduction in consumer spending contributes to a downward spiral in the economy. It leads to further drops in employment, income and consumer spending. If the Federal Reserve doesn't intervene by reducing interest rates, then the country could fall into a recession. The only good news about lower home prices is that it lessens the chances of inflation.

That stubbornly hot housing market now has housing economists flirting with the real estate industry’s most feared word: bubble.

“We’re not in a housing bubble just yet—but we’re skating close to one if prices continue rising at the current pace,” said George Ratiu, a housing economist at Realtor.com, in an article published last week on the home listing site.

(David Howell is executive vice president and chief information officer of McEnearney Associates., “Despite rising home prices, this isn’t 2005 again,” pg online @ //um-ef)

Bubbles are great to have in champagne, baths and a host of other things, but they are not good for the real estate market. A real estate bubble is generally caused by unjustified speculation in the housing market that leads to a rapid and unsustainable increase in prices. When the real estate bubble bursts, prices decline quickly — often to levels lower than when the surge in prices started. There is no doubt that home prices have risen significantly in the Washington area over the past several years, and affordability, especially for first-time home buyers, is a real concern. In such an expensive region of the country, many Washington-area residents are wondering if we’re in a bubble right now. The short answer is no. From 2002 through 2005, home prices in the Washington area skyrocketed. Demand was artificially high, driven by ridiculously low “teaser” interest rate mortgages. In 2002, prices rose 14 percent over the previous year — and that was just the beginning. Home prices were up 15 percent in 2003, 20 percent in 2004 and 21 percent in 2005. This truly was a period of “unjustified speculation.” Because mortgage underwriting guidelines were essentially nonexistent, more and more buyers rushed into the market to buy homes they could not afford with the expectation they could cash in their gains later. More Howell: Low inventory of affordable homes is yet another barrier for millennial buyers In a market that historically has average annual home price appreciation of about 4 percent, those meteoric home price increases were completely unsustainable, and a consequential adjustment was inevitable. And as many remember, it wasn’t just an “adjustment.” When those artificially low adjustable rate mortgages started to adjust and guidelines tightened, demand dropped. There was a 40 percent dip in the number of home sales in 2009 compared with the peak in 2005. At the same time, the market was flooded with new inventory as homeowners rushed to sell homes they could no longer afford. With the enormous drop in demand and the jump in homes on the market, prices dropped almost 15 percent in 2009. Prices only started to head back up in 2012. None of those demand and supply conditions exist today. Let’s take a look at demand. There are three basic ways to increase the desire for housing: an upturn in economic activity, an increase in population and generally low interest rates. To a large degree, all three of those exist today. The region’s economy is doing pretty well, especially in the District. Low-mortgage interest rates have created an extremely attractive environment for prospective home purchasers, and the region has grown by 1 million residents in the past 14 years. Yet demand has not exploded. The number of home sales this year in the Washington area will be virtually identical to the number that sold in 2003. There have been significant demographic shifts — people are waiting longer to marry and form households, and student loan debt makes it harder for many to buy their first home. And despite those low interest rates, it is harder to qualify for a loan. In short, demand is reasonable and not being fueled by speculation. More Howell: Why the D.C. area’s tight inventory of home listings won’t be relieved anytime soon On the supply side, inventory of available homes is at an historic low. Just as buyers are waiting longer, homeowners are staying in their homes longer. Nationally, the median number of years sellers have been in their homes has risen from six years in 2000 to 10 years today. New construction isn’t keeping pace with household formation. Low inventory has certainly contributed to increasing home prices, but even in the hottest market areas in the District, annual appreciation rates have been between 6 percent and 8 percent over the past three years. It is less in the suburbs. If demand were greater, the lack of inventory would have pushed prices much higher. Markets seek balance over time, as long as they are not artificially stimulated or restricted. The hottest areas in our region, such as Washington and its close-in suburbs, are due for an adjustment because 6 percent to 8 percent appreciation isn’t sustainable forever. In our area’s more suburban markets, the current sub-4 percent appreciation rates align with historic norms. And we know that eventually mortgage interest rates will climb, and that will ease some of the upper pressure on home prices. The inevitable market adjustment will come in the form of lower appreciation rates, not a drop in prices.

Sixth, there are implications for financial stability. Lower rates, the result of central bank debt purchases, and inflation fears might drive a switch to real assets, increasing the price of property and shares representing claims on underlying cashflows. It may encourage hoarding of commodities. This exacerbates inequality and increases the cost of essentials such as food, fuel and shelter. Fear of debasement of the value of paper money, in part, is behind unproductive speculation in gold and cryptocurrencies.

Seventh, MMT might undermine trust in the currency. Instead of spending the payments, citizens may question a world where governments print money and throw it out of helicopters.

While people could spend the money on anything they want, it’s not hard to envision a UBI being a godsend to an individual struggling to make make rent. But could a UBI be a solution to the affordable housing crisis on a broad scale?

It’s a tough question to answer in the abstract because there’s no telling how much of the money would be spent in the housing market. But the risk of a UBI to housing would be if the added income generated by a UBI would simply create more demand for housing in the United States at a time when demand is already high and supply is low. Additional income for everybody means everybody has more money to spend on housing, so a lot of people would be looking to move into a bigger or nicer place.

(Wes, Real Estate Agent, “How Universal Basic Income Could Change Real Estate Investing,” pg online @ https://www.biggerpockets.com/forums/48/topics/719023-how-universal-basic-income-could-change-real-estate-investing //um-ef)

INCREASED HOUSING DEMAND, WITHOUT INCREASED SUPPLY At the bottom end of the market, this UBI of $1,000/month would suddenly allow many people who could not afford a home without it to suddenly purchase one. Using a DTI Ratio of 45%, a married couple would have an extra $900/mo (45% of $2,000/mo) to allocated to their housing expenses, allowing them to more than double their pre-approval amount in some cases. Without UBI: Max Purchase Price = $117k at $800/mo With UBI: Max Purchase Price = $250k at $1,710/mo (+$900/mo to take new DTI to 45%) (Note: I'm not a lender, and surely there is more to this calculation than I am sharing here, this is merely just meant for illustrative purposes) Further, the extra money would allow many people who already have the income and credit but no down payment to suddenly be able to save up for the down payment, creating additional buyers at the lower price ranges. But without increasing the supply of available homes, the base floor price for housing would certainly be raised. Simple supply and demand. MORE POTENTIAL MOVE-UP BUYERS With more income available for housing, some buyers will be tempted to "trade up" and purchase more housing than they could normally afford. Suddenly you'd be able to move into that better school district or nicer neighborhood instead of settling for what you could previously afford. Thereby creating more demand in the mid-range markets as well (Under $500k in most areas). But still, the increased demand would be felt at the bottom end of the price range where it already exists. I recently received 9 offers in the first weekend for a $150,000 home in Phoenix, and could easily see that number doubling to 20+ offers with a UBI plan for an extra $1,000/mo. EFFECTS ON THE RENTAL MARKET You'd likely see a similar trend in the rental market, with people moving out of their relative's house and into their own rental who couldn't afford to do so before. Also, you'd see renters at the lower end in not-so-nice neighborhoods suddenly move out into nicer neighborhoods that are safer with better schools. The big question is how many landlords are going to jump ahead of this demand and automatically bump the rents a superficial amount now that everyone has an extra $1,000 every month. QUESTION: If you were a landlord and had a 10-unit apartment building, and suddenly all your tenants are now receiving an extra $1,000/mo, how tempted would you be to raise the rent sharply for no other reason? If that happens, you might see an even greater increase in demand for purchasing lower level housing, with tenants perceiving they're getting a bad deal in their current rental, motivating them to finally buy a home instead. EFFECTS ON SHORT TERM RENTALS (STR) Since short term rentals are associated with travel, which itself is somewhat of a luxury, I don't think UBI would have as much impact on the STR market. Surely, more people that couldn't afford to travel in the past would suddenly be able to, but they may choose to spend that money elsewhere instead. And that's the whole rub with UBI. When everyone has a larger supply of money, the demand for ALL things naturally increases. People will spend money they didn't have in the past on new non-essential items (things they only wished they could afford in the past, but suddenly now can). LOW PRICED MARKETS BUBBLE FROM INVESTORS With extra income every month, and a resulting increase in local housing costs, real estate investors would swamp lower priced housing market like Ohio where homes are under $100k. Investors who may not be able to invest locally because of the increased demand and raising of the lower home prices would look to other states where homes are already more affordable. This could have a devastating effect on those markets who are already experiencing fierce demand in the lower price ranges from owner occupants, with an additional demand coming from out of state investors, making the housing situation worse than it was previously.

(“America’s Housing Market Is Officially Over-Heating Everywhere. How Long Will It Last?,” pg online @ //um-ef)

By the numbers, however, it’s becoming harder and harder to argue that America’s housing market isn’t already over-heating. Inventory in many regions has hit record lows. Days on market are now measured in hours. Home prices are up 15.8% on average year-over-year across the country according to a recent National Association of Realtors’ report (and in some places like Miami are already officially in super-boom mode). And in markets like Nashville, Sacramento, and Boise contractual absurdities like waiving all contingencies are now standard conditions as panicked buyers over-reach to get in on the action before the current boom decelerates.

(“Does the U.S. risk another housing market fall?,” pg online @ //um-ef)

It has been unusual for economic expansions to last more than a few years after the economy reaches full employment, which it now has, and the country should remain on the lookout for early signs of imbalances whose reversal eventually could trigger the next recession. With the recent events of 2007-2009 still lingering on investors’ minds and nominal housing prices now exceeding their peaks from 2006, the housing market is an obvious place to look for signs of overheating. In this research report, we highlight specific pockets of overheating in detailed data on U.S. counties. For example, high prices, despite expanding supply, such as in Denver, Seattle, Washington, D.C., Portland, Oregon, and Boston indicate some correction risk in J.P. Morgan’s models. Cities with staggering high prices, such as New York City and the San Francisco Bay Area, suggest some chance of correction even with constrained supply. But there is currently no place with the same combination of rapid price growth, rapid debt growth, and expanding supply seen in some areas in 2006.

(Mark Zandi, January 6 2022, “No, the housing market isn’t in a bubble. But there still are many things to worry about in 2022.” The Washington Post, https://www.washingtonpost.com/business/2022/01/06/housing-market-forecast-2022/)

House prices are sizzling. Not just in swanky neighborhoods in the nation’s big cities or in resort towns. Not just in the suburbs or exurbs. Not just in inner cities or in rural areas. Just about everywhere. House prices were rising strongly before the pandemic, but since the pandemic hit they’ve been on a tear. The median existing house price — half of homes sold for more and half for less — has surged to more than $350,000, about double what it was a decade ago. Just in the past year, the price for a typical home is up almost 20 percent. And in about one-fourth of the nation’s 400-plus metropolitan areas, prices have rocketed by more. Even in the mid-2000s just before that housing bubble burst, fewer than one-fifth of metropolitan areas had seen annual prices increase as much. So, are we in another housing bubble? No. Not yet. But I say this with less confidence than I did a year ago, and if current trends continue for another year, I won’t be saying it at all. There are good reasons house prices are up a lot. First, a shout-out to the federal government’s yeoman efforts to shore up the housing market during the pandemic. This includes a foreclosure moratorium and forbearance on payments on government-backed mortgages, which have forestalled distressed home sales, typically at big discounts that weigh on house prices. There have been amazingly few foreclosures during the pandemic. House prices have also been supercharged as mortgage rates declined to record lows. In no small part due to the Federal Reserve’s efforts, the rate on a typical 30-year fixed-rate mortgage loan fell below 3 percent at the start of the pandemic and has been hovering near there ever since. For most of the economic expansion before the pandemic, rates were closer to 4 percent. And in the housing bubble they were about 6 percent. Since most home buyers purchase as much home as their mortgage payment and income will allow, lower mortgage rates quickly juice demand and house prices, particularly when there is a shortage of homes, as there is now. This housing shortage had its beginnings in the bursting housing bubble and collapse in new home building. Builders have slowly ramped up construction since then, but even now the number of new homes is not sufficient to meet demand. The vacancy rate for homes for sale has never been lower and continues to decline. The housing shortfall is especially acute for lower-priced homes. More restrictive zoning since the financial crisis and much higher labor, lumber and other material costs have vexed the economics of building homes at lower price points. The chaos in global supply chains complicates home building even more. Work-from-anywhere, set off by the pandemic, has further powered housing demand. Many apartment dwellers in the nation’s largest urban centers that were slammed hardest by the pandemic fled for the safety and bigger spaces of the suburbs, exurbs and smaller cities. Many bought homes and have been willing to pay much higher prices that look like bargains compared with house prices in the city. Take New York City, where well over half a million more people have moved out than have moved in since the pandemic began. New Yorkers are buying homes in places like Atlanta, Austin, Orlando and Tampa. Similar numbers have left the Bay Area and Los Angeles for places like Boise, Idaho; Boulder, Colo.; Las Vegas; and Tucson. New Yorkers and Californians accustomed to outsize house prices have viewed much lower prices in smaller communities as bargains, even though they are paying much more than any previous buyer has. House prices in these communities have gone parabolic. Home-buying is also enjoying a demographic tail wind with the bulk of the large millennial generation now in their early 30s, an age when previous generations have purchased first homes. For economic and social reasons, the millennials may take a bit longer to become homeowners. They’ve been slower to strike out from their parents’ homes and start families. But single-family housing demand will continue to get a boost from this cohort through at least mid-decade. More Zandi: What actions can policymakers take to avert the brewing national housing crisis? House prices should be riding high, but they have risen so far so fast that they are increasingly disconnected from household incomes, apartment rents and construction costs. If prices consistently rise more quickly than incomes, owning a home ultimately becomes unaffordable. If prices get too far ahead of rents, it makes more financial sense to rent a home than buy it. And if prices outstrip the cost of constructing homes, builders have a strong incentive to put up more homes. Based on these tried-and-true measures of house-price valuation, homes nationwide appear overvalued by as much as 15 percent, and in much of the South and West they are overvalued by more than 20 percent. But while the housing market is overvalued, it’s not a bubble. That would happen if the market turned speculative with investors — particularly buyers who purchase homes looking to sell quickly for a profit — dominating the market. House flips — an arms-length sale within one year of the previous sale — have picked up in recent months but are still not a serious concern. Much of the flipping is by investors purchasing older homes, particularly in less bubble-prone Northeast and Midwestern cities, renovating them, and then quickly selling. Moreover, unlike in the previous housing bubble, today’s housing investors are mostly large well-established companies that have longer-term investment horizons. They buy homes, fix them up and then rent them to families who can’t afford to buy, but want the lifestyle offered in a single-family home. More Zandi: Housing market could shift under new tax law Nonetheless, it isn’t a stretch to think inherently over-optimistic flippers will find it tough to pass up what looks like easy money, become more emboldened and cause the overvalued housing market to cross to a bubble. They calculate that if they had purchased a home in some of the nation’s hottest housing markets a year ago, say Phoenix with a typical 20 percent down payment, and sold it today, they would have reaped a near crypto-like 150 percent return. Stock prices, which have had their own amazing run, are up only 30 percent over the same period. This financial arithmetic won’t work for very long, but it can work long enough to inflate a bubble. This would be especially disconcerting if investors finance their purchases with more debt. Indeed, mortgage debt is increasing quickly. It is up at a near double-digit pace over the past year, the strongest growth since during the previous housing bubble. There are big differences between now and then, since today’s lending is mostly plain vanilla 30-year fixed rate mortgages, where borrowers’ credit history, income and appraised housing values are well documented. This is in contrast to the last bubble when adjustable rate loans were made to borrowers with low credit scores — remember the ubiquitous subprime two-year adjustable rate loan — and questionable, even fraudulent, borrower documentation.

(Daniel, “Will the U.S. Housing Market Crash in 2022?,” pg online @ )

Housing prices exploded during the pandemic. Due to a mix of low interest rates and limited availability in desired areas, people bid up the price of homes leading to an overall increase of 11.3% in 2020 and 16.9% in 2021, according to data from Freddie Mac. "The increase in house-price growth will be less transitory than the increase in consumer prices, as the U.S. housing market will continue to struggle with a shortage of available housing for many months to come," wrote Norada Real Estate. It's a seller's market. But rising home prices, relatively easy-to-get mortgages, and consumers who seem unconcerned about prices raise the specter of the 2008 housing market crash. Market conditions are, of course, not exactly the same, but the current situation does have many people questioning whether what goes up must come down. Is a U.S. Housing Market Crash Inevitable? “It is unlikely the housing market will crash because of two main factors," Community Capital Management Chief Investment Officer Andy Kaufman told TheStreet via email. "(1) interest rates are at, and will likely remain at, historically low levels (even if rates move higher by a percent or two) making long-term mortgage financing economical and (2) due to strong wage inflation, first-time homebuyers or buyers looking to upgrade would likely be eager to step in should prices start drop.” That echoed the opinion of many of the industry experts who responded to TheStreet's request for comment on whether the U.S. housing market will crash. Not crashing, however, does not mean an endless increase in prices, Tenpao Lee, professor emeritus of economics at Niagara University, told TheStreet. Lee noted that conditions are very different from the Great Recession of 2008-2009, when the housing market crashed more than 40%. "During the Great Recession of 2008-2009, the demand for housing disappeared due to the higher unemployment rate, while the supply/inventory/construction was high with booming expectations initially followed by tremendous defaults," he wrote. "Both demand and supply pointed to lower prices. As a result, housing prices declined/crashed to an unprecedented level." That's not likely to happen in 2022, he explained. "Today, with higher expectations of interest rate and inflation, the demand for housing may disappear a little, but the supply of housing has also declined due to the higher labor and lumber costs caused by the supply chain issues under the pandemic," he wrote, "In other words, the demand side indicated lower prices while the supply side suggested a different story. In addition, the unemployment rate is recovering gradually which may help stabilize the demand side. Therefore, the net effect on housing prices may result in a decline but probably will not be a crash." Why It's Not 2008's Housing Market While on the surface 2022 has a lot in common with 2008, Certified Financial Planner Julian Morris explained why the current situation is very different. "Unlike 2008, this market is driven by supply and demand. Younger families are moving out of the cities to suburbs. The acceleration may slow, but unless there is a glut of extra housing, which there is not, there will be no imminent crash," he wrote. "2008 was driven by folks getting adjustable-rate mortgages and overleveraging. They defaulted and caused a glut. This time is different." In 2008 banks made it very easy for pretty much anyone to get a mortgage. Credit standards were low overall and people with decent-to-good credit could get lo loans without the bank verifying their income or their assets. That created an environment where even a slight economic downturn made many people likely to default (and that's exactly what happened). "Government-backed loans from Fannie Mae and Freddie Mac have also tightened their loan guidelines, which helps keep bad loans from overwhelming the system," wrote Perrille Premier Realty Group's Melissa Perrille. That lack of easy-to-get money for unqualified buyers gives the housing market a level of security and protection from a crash it did not have in 2008. The reality is that unless something changes in the economy that leads to increased defaults (or lenders get lax on their standards as they did in 2008), the market will remain strong for inventory-related reasons. "Right now, supply is still very tight and demand is still very high," wrote Christopher Avallon, a real-estate broker. "Even with rates going up, if inventory does not increase, we will be seeing more of the same from 2021."

That stubbornly hot housing market now has housing economists flirting with the real estate industry’s most feared word: bubble.

“We’re not in a housing bubble just yet—but we’re skating close to one if prices continue rising at the current pace,” said George Ratiu, a housing economist at Realtor.com, in an article published last week on the home listing site.

(Marco, “Housing Market Predictions 2022: Will it Crash This Year?,” pg online @ //um-ef)

Let us discuss the most talked-about housing market predictions for 2022. Here are some educated guesses as to what the future of the US housing market will look like based on what real estate pros are saying. The housing market has had an outstanding year, with record low-interest rates, the strongest yearly growth in single-family home prices and rentals, historically low foreclosure rates, and the highest number of home sales in 15 years. Will the housing market crash in 2022? The answer is that it will not crash. Most likely the housing market is expected to stay robust through 2022, with many of the trends that propelled real estate to new heights last year remaining firmly in place this year as well. Last year, homeowners saw a market in which their properties sold quickly and frequently above the asking prices, as numerous home buyers fought for the winning bid. The housing market is coming off a year in which home prices in the United States increased by an unsustainable 18.8%. Will the market continue to grow at this rate or will it be a little less frenetic this year? The housing market is even tighter now than it was prior to the spring 2021 housing frenzy. Even industry titans like Zillow increased their bullishness in January, increasing their projected home price growth rate for 2022 up to 16.4 percent. However, Zillow determined earlier this month that even that rate was too conservative. They now estimate the year-over-year rate to peak at 21.6 percent in May and then decline to 17.3 percent at the end of the year. According to another study by Zillow, the total value of private residential real estate in the United States increased by a record $6.9 trillion in 2021, to $43.4 trillion. Since the lows of the post-recession market and the corresponding building slump, the value of housing in the United States has more than doubled. The most expensive third of homes account for more than 60% of the total market value. The market value hit the $40 trillion mark in June of last year and since has been gaining an average of more than half a trillion dollars per month.

Over the last few years, the demand from lack of inventory has been one factor driving that home price appreciation. Back in 2008, during the housing crisis, many tiny home builders went out of business, and new builds plummeted. New builds started to pick up again, but the global supply chain shortage increased the cost of construction materials like wood and slowed the progress.

New home listings are at a record low, according to Realtor.com’s January Housing Trends Report, which showed new listings were down about 5% year-over-year in January. Compared to the previous month's 21% decrease and November's 17.2% decline, the current rate of decline is significantly lower. Despite this improvement, new listings still lag behind pre-pandemic levels between 2017 and 2019 by 25%.