Members of Generation Z might struggle to remember a time when the US housing market prices were doing anything other than rising exponentially, but sure enough, there have been times in history when this has been the case.
With increases in average wages way behind, it’s no wonder that many people have concerns about the growing affordability crisis.Could we find ourselves in the middle of a housing crisis once the market catches up?
To answer this question, let’s take a quick look at how the property market has performed historically. It’s true that US housing market prices tend to trend upward over time; we all need a roof over our heads, so there will always be a steady supply of people looking to purchase properties.
You don’t need to look far to see suggestions that 2022 could be the beginning of the next big financial crisis. The stock market isn’t holding up well, with the S&P seemingly falling further every day.
A recent report from J.P. Morgan has explored whether there’s any truth to this speculation. The nominal housing prices (which analyzes price changes relative to a base time period, in this case 2010) is now 40% higher than in 2012 and 4% greater than 2006, which was previously the peak.
However, a market correction may not be coming. Many believe the current environment is very different from what we observed in 2006 — there’s more to the market than just price growth.We need to look at the current state of a few other risk factors.