5 Ways to Avoid the Pain of a Housing Market Crash


Whatever the current state of affairs for house sellers may appear to be, a look back in history warns us that a housing market crash often follows significant price rises.


In the early 2000s, almost anyone with a pulse could get a mortgage, and house prices skyrocketed.


Home prices began to soar, reaching new-highs. Soon, mortgage-backed securities were sold off in large volumes, and mortgage defaults and foreclosures rose to record-breaking levels.


As hundreds of thousands of houses went into foreclosure and lenders declared bankruptcy in 2007, the market slowed to a crawl before collapsing totally.

Five Ways to Protect Against a Housing Market Crash

Most experts believe the US  will not suffer a collapse on the scale of the 2008 financial crisis.  This is due to several factors, including regulatory changes affecting lending processes. However, what practical steps can be taken to protect against a downturn?

1. Build an Emergency Fund

Examine your financial situation. Are you having trouble sticking to a budget because you are overextended with debt obligations?

To be prepared for emergencies, save enough money to cover three to six months of expenses. You may aim for a larger emergency fund. However, this depends on your comfort level. While trying to be positive, prepare for the worst-case situation.

2. Consider Refinancing

If you already own a property, consider whether now is the best time to sell. Consider refinancing your current mortgage and take advantage of the present low rates.

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