Will the Housing Market Crash in 2021?
People that are paid to know if the housing market will crash are virtually unanimous in their opinion that it will not crash. As long as the demand for homes is higher than the supply of homes available, the market will not crash.
The millennial generation, those between 25 and 40 years olds, are the largest generation in American history. They are making major purchases later than prior generations did. One major cause for this is the amount of student debt that millennials need to pay back. Costs for weddings and home purchases are being delayed so that they can get their finances in better order.
As they pay down their debt, they are now at the point where they are looking to start families and build wealth. The key to this wealth-building strategy for many is the purchase of a home. The problem that they are facing is that the housing supply is not meeting the demand for homes. According to Wall Street Journal, the annual housing supply “is 3.8 million single-family homes short of what is needed to meet the country’s demand.”
The shortage in the supply of homes means that home sellers are getting multiple offers and higher prices for their homes. The bad news is that our home prices continue to rise; many would-be home buyers are simply being priced out of the market.