According to the latest LendingTree survey of over 2,000 U.S. consumers, 44% of Americans think the market is at risk of a housing crash in the next year. And with some non-homeowners believing a crash is the only way they could afford a home, it may not seem surprising that 35% of Americans want the market to crash.
Here’s what else the survey found:
- Among homeowners, 51% say they don’t want the market to burst, but 15% say they want a crash to lower their property taxes, and they believe it would lead to future stability.
- 32% of non-homeowners think a crash is their only way to own a home—that rises to 39% among Gen-Zers and 38% among millennials who don’t own.
- Half (50%) of homeowners say their current rate is keeping them in their current home. In addition, three-fourths (75%) of Americans are unsure if they’ll ever see rates as low as in 2020 and 2021, and 11% of homeowners don’t think they’ll ever be able to buy a home again.
- 53% of all Americans are worried that interest rates will remain high. Separately, 79% expect rates to rise for at least another year. Looking ahead, 27% believe mortgage rates will be 8.00% or higher one year from now.
You can check out the full report here.
Despite consumer predictions, LendingTree's Senior Economist Jacob Channel says there’s reason to believe rates will go down next year. "Across the board, interest rates have risen dramatically since the start of 2022, and mortgage rates are no exception. Fortunately, just because rates have risen over the last two years doesn’t mean they’ll continue to climb in 2024. On the contrary, there are encouraging signs, like cooling inflation, that could help bring down rates next year. If inflation continues to cool and the Fed starts cutting rates in 2024 (as they appear poised to do), rates should fall. They won’t plummet, but they might end up closer to 6.00% or 7.00% than 8.00% or higher.”
Channel also cautions consumers to be careful what they wish for. He isn’t surprised that so many people want the market to crash, but he’s skeptical about whether they know what it would mean.
“Right now, home prices are high, as are mortgage rates,” he says. “With that in mind, I can understand why some might wish for a housing crash that brings lower prices. Unfortunately, if the national housing market were to crash, odds are that it would bring down the rest of the economy with it.”
Probably most distressing in the survey is the belief by one in nine consumers who don’t think they’ll ever be able to buy a home again. Almost one in five find it unlikely they will achieve homeownership.
Although it’s difficult to say what the future holds, Channel says consumers are right to believe seeing low rates again is unlikely. “There’s a chance that they could fall back to their 2020 and 2021 levels again at some point, just as there’s a chance they’ll spike back up to their early 1980s levels,” he says. “From where things stand, I’d say that either scenario is more unlikely than not.”
While Channel believes rates will come down over the next few years, he says he’d be genuinely shocked if they fall to their height-of-the-pandemic record lows: “Unless something catastrophic (happens) — like another major pandemic or a meteor crashing into Manhattan — I think people are right to assume rates aren’t going to fall to sub-3.00% levels anytime soon, if ever.”
