Buying a home is an exciting and challenging process. Deciding whether or not to make such a large purchase can be stressful, and your search might leave you with a lot more questions than answers. Even when the economy looks good and housing prices are right, the amount of thought that goes into this decision-making process can be understandably overwhelming. So, during times of economic uncertainty like we’re experiencing today, when housing prices are sky-high and mortgages spike, thinking about buying a home might just seem like the most stressful thing you ever do!

Since the beginning of the coronavirus pandemic in March 2020, housing prices have seen a huge 45% increase, according to NAR (National Association of Realtors) data. The last time that the housing market looked this threatening was in 2008 when house values crashed along with the global economy– the most disastrous economic downturn since the Great Depression. With rising mortgage rates and housing prices sky-rocketing much more quickly than incomes, many potential buyers and sellers are asking themselves if or when the housing market will crash.

According to NAR data, the median home price in the US passed $400,000 for the first time ever– an $100,000 increase since the beginning of the pandemic. Experts are worried at the pace of this pricing increase; however, this doesn’t mean that a sharp drop in real estate prices is necessarily the outcome. 

Some housing economists do predict a slight decline in prices of about 5% due to the massive rise in mortgage rates by mid-2023, but there doesn’t seem to be any prediction of a severe drop on the horizon. Why? Well, credit conditions are much more stringent than in 2007, fixed-rate mortgages are much more prevalent, and an imbalance of supply and demand are all likely factors in assuring that a dramatic crash doesn’t happen any time soon. 

Logan Mohtashami, lead analyst at HousingWire, explains, “We don’t have a bubble. We just have unhealthy home price growth.” Some economists think that the growth may steadily continue throughout 2023, but not at such a harsh incline as within the last two years. So, will the housing market crash? Probably not, according to many economists. But, will prices become more affordable any time soon either? Maybe by a small percentage, but it’s not likely that we will see anything much more affordable within the next year or so. 

As for mortgage rates, some experts think that the federal government’s reaction to inflation will cause rates to dip back down to normal while others expect a slight appreciation in these rates. Similar to predictions about housing prices, there isn’t an expectation that mortgage rates will continue to skyrocket but rather that they will plateau or increase only by a small percentage in the next year.

Across the board, expert predictions seem to indicate that at least for the next year our housing market will continue to be hot but will decelerate in pricing appreciation. This means that we can expect prices to look the same as they do now, with a potential decrease in mortgage rates on the horizon. But as for a repeat of the 2008 crash? So far, we seem to have learned our lesson!