Housing Crash Begins As US Housing Market Enters 2023 In A Massive Bubble

If you’re waiting for a housing market crash so that home prices become affordable again, analysts say you won’t have to wait that long. The market is expected to spiral downward this year as a series of indicators suggest that more trouble is ahead. Experts warn that the free-fall has already begun, and we’re now witnessing eerily similar circumstances to the 2008 disaster.
From December 2021 to December 2022, housing affordability has plunged by almost a third. That explains why single-family home sales fell for the 11th straight month. Even Warren Buffett’s favorite metric suggests that a major reversal is underway. The Berkshire Hathaway Inc CEO once explained that one of the key metrics he watches for a downturn in the housing market is a reduction of housing starts. With more and more Americans being turned off by high mortgage rates and builders being forced to cut back, construction on new homes declined by almost 6.5% from October levels, and 4.1% from November levels, and this trend will likely continue through 2023. Compared to the same time last year, housing starts actually dropped by 9%.
But still, the boom in construction seen in 2021 and in the first two quarters of 2022 is about to inundate the market with new supply, and that’s the perfect recipe for crashing prices, says David I. Kranzler from investing.com. Another breathtaking contraction in housing prices is just a matter of time, Krenzler stresses. Although the lending abuses that occurred in the run-up to the last bubble haven’t been repeated, the economic reality for millions of Americans remains undeniably stark, the expert notes. We don’t have mortgage-backed securities anymore, but the housing market is rapidly freezing right now. Fewer buyers are willing to commit to new purchases due to the higher monthly payments while fewer sellers are willing to list their homes in a weakening market, particularly considering that declining prices could mean taking a loss.
Put it together, affordability is plunging, mortgage costs are going through the roof, and a flood of newly built homes is about to enter the market, vastly increasing supply. It goes without saying that this is a very dangerous combination. The risks of a real estate collapse continue to mount, and a series of stocks will also suffer, just as we saw during the last crash. “That’s because consumers have so much of their wealth tied to their homes,” Kranzler explains. “The bottom line is that the housing market is in serious trouble. So it’s imperative to protect your portfolio from another “Lehman moment.” 
The fact that many real estate companies are already in deep financial trouble further proves that the housing market meltdown is already upon us. At the same time, in the past quarter, investor home purchases also plummeted by 30%. Homebuilders are also being impacted by this tighter environment. Cancellation rates have accelerated during the fourth quarter compared to the third quarter, jumping to over 20% from 13% in the previous quarter.
The housing market crash is just starting to build momentum. If we observe the sizable decline in existing home sales in November – 7.7% from October on a seasonally adjusted basis and the 35.4% plunge year-over-year, we can clearly see that conditions are deteriorating alarmingly fast. That actually marked the biggest yearly decline since autumn 2008. Officials say that conditions are different this time around. And that may be partially true. But unfortunately, the result is going to be the same.

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