Experts Say Huge Housing Crash Ahead. How Will It Effect Montana?
I'll be honest, when I came across the article that was published on thefederalist.com the title certainly grabbed my attention.
"Key Indicator Hints America Is Headed For Its Worst Real Estate Crash In History"
Ok, ok, but that's what headlines are supposed to do right? I mean, we're scrolling through social media and we see some sort of bold headline and we click on the article only to find out that the title was much better than the actual article.
That wasn't the case with this article, however.
I'll be the first to admit that I'm not a financial expert, nor do I fully understand the ins and outs of the market and how it works. However, history has shown that there are some important indicators that play a big factor in how things shake out with the economy.
So, what are we looking at here?
According to the article, as interest rates continue to rise, so does the possibility of a housing crash. The theory behind that is when rates are low, people often buy a house that might be a bit out of their price range, along with all the other things we need in life. So when the rates increase, well, you get the picture.
So what are the folks saying is possible?
According to the article from thefederalist.com "The bubble that developed from 2002 to 2007 peaked at around a 47 percent price increase, before plummeting by 20 percent from 2007 to the first quarter of 2009. If we see a similar pattern emerge for the bubble that has been developing since roughly 2012, then we could see housing prices drop by 30 to 40 percent over a two-year period."
Whoa...so we could see up to a 40 percent drop over the next few years if the bubble bursts?
Well, that's interesting, isn't it? I mean, it's a bit of a double-edged sword really. On one hand, those who are already in a home are certainly not complaining about the value of their homes skyrocketing. However, those of us that are renting and hope to purchase a home, but simply can afford the prices here in Montana are thinking, "well, I mean a 30 to 40 percent drop wouldn't be horrible".
Of course, overpriced homes aren't just here in Montana, they're everywhere across the United States and that is why the experts predict that we are heading towards a crash. How will that affect us here in Montana?
If a crash happens, we will most certainly see lower prices across the state, however, how will that affect cities like Bozeman, Missoula, and the Whitefish area? All three are desirable places to live and will always come at a premium price.
Can we expect to see home prices drop almost half in those areas? Some folks sure hope not, while others have their fingers crossed that they do.