Tired of hearing about the housing market crash? This Wall Street expert doesn’t think it will happen

Image Source: Getty Images

Your rich best friend has some news for those who are sure the housing market is about to crash and burn out.


Key Point

  • Negative bias causes humans to filter out good news and focus on bad news.
  • Homeowners today are far more qualified than those in the Great Recession.
  • Low inventories continue to push home prices higher.

Suppose you have two headings displayed. The first is “City wins award for cleanest park.” Another says, “Wild boars are released in city parks.” Which one catches your attention? Which do you read first?

Perhaps you can read about wild boars and make sure you stay far away from that park.

There’s a reason humans are drawn to negative news. It’s called “negative bias”. There are many stories of people doing great things, but our focus is on his one story of a thief stealing Holiday-his gifts from his doorstep. why? As humans, we have evolved to react to threats. Without conscious thinking, we weed out the good and look for bad news that can affect us.

That may be one reason why many believe the housing market is about to collapse. They could have read a few articles explaining why it wasn’t happening immediately, but one article of his about an imminent crash stuck in their minds and said, ” It feels true.”

For some, what feels true (even if it’s a product of anxiety) becomes true. The view on the possibility of a crash may surprise you.

doesn’t happen

Tu — the most commonly known your rich best friend — There’s a trick to taking emotion out of your finances. And let’s face it when it comes to such a big investment that we have to take out. mortgage Emotions come into play to pay for it.

Tu spells it out succinctly. This is not 2008. Millions of homeowners live in expensive homes that shouldn’t have been approved for mortgages. Post-Great Recession federal regulations changed the way lenders did business so dramatically that today’s homeowners would never have been approved for a home loan without sufficient qualifications.

irresponsible lender

My husband and I moved to Southern California in late 2000. recessionI didn’t plan on staying long so I decided to rent it. The house we rented was in a new beautiful area of ​​town and the rent we paid was reasonable. It seemed odd to him that one out of about three homes was vacant or foreclosed. It didn’t take long for the homeowners who abandoned those homes to realize that loans they shouldn’t have been eligible for were approved.

According to Tu, it was irresponsible lenders that caused the crisis. All homes in neighborhoods (and regions across the country) lost value as they emptied. The market was now flooded with homes, and homes were being sold at bargain prices. In fact, our landlord offered us the house we were renting for about 50% of its previous value (at the time, we had several valid reasons not to accept his offer).

supply and demand

It’s all about supply and demand, says Tu. During the Great Recession, the market had surplus housing. Today the inventory remains much less than usual.while in stock got a little excitedwhich is still less than half of where the housing market should have normalized.

Simply put:

  • Qualified buyers today have a much lower chance of foreclosure or eviction.
  • The number of homes available for sale is still surprisingly low.

Too sums it up by saying, “If you’re waiting for a housing collapse, don’t hold your breath.”

Leave a Comment