Will There Be a Housing Crash in 5 Years?

Even with so much data showing home prices are actually rising in most of the country, there are still a lot of people who worry there will be another home price crash in the immediate future. In fact, a recent survey from Fannie Mae shows that 23% of consumers think prices will fall over the next 12 months. That’s nearly one in four people who are dealing with that fear – maybe you’re one of them.

To help ease that concern, here’s what the experts say will happen with home prices not just next year, but over the next five years.

Experts Project Ongoing Appreciation

While seeing a small handful of expert opinions may not be enough to change your mind, hopefully, a larger group will reassure you. Here’s that larger group.

The Home Price Expectation Survey (HPES) from Pulsenomics is a great resource to show forecasts for home prices over a five-year period. It includes projections from over 100 economists, investment strategists, and housing market analysts. And the results from the latest quarterly release show home prices are expected to go up every year through 2027 (see graph below):

And while the projected increase in 2024 isn’t as large as 2023, remember home price appreciation is cumulative. In other words, if these forecasts are correct, after your home’s value rises by 3.32% this year, it should go up by another 2.17% next year.

If you’re worried home prices are going to fall, here’s the big takeaway. Even though prices vary by local area, experts project they’ll continue to rise across the country for years to come at a pace that’s more normal for the market.

What Does This Mean for You?

If you’re not convinced yet, maybe these numbers will get your attention. They show how a typical home’s value could change over the next few years using the projections from the HPES. Check out the graph below:

In this example, let’s say you bought a $400,000 home at the beginning of this year. If you factor in the forecast from the HPES, you could potentially accumulate more than $71,000 in household wealth over the next five years.

Plus, this is only taking into account true appreciation. If you have a mortgage on your home, it’s safe to say you would have paid down a decent chunk within 5 years, giving you even more equity. It’s like a savings account on steroids that actually compounds at a meaningful rate. Not even the stock market will give you that return with such little capital invested.

Bottom Line

If you’re someone who’s worried home prices are going to fall, rest assured, current projections show just the opposite – nationally, home prices will continue to climb not just next year, but for years to come. If you have any questions or concerns about what’s next for home prices in our local area, let’s connect.

Preview Into Future Editions:

• Tips on how to find your next home if/when you sell your current home.

• Ways to purchase a home with a 5% interest rate, in today’s market.

• For many people, homeownership is a bigger contributor to your retirement than a 401(K). Learn how you can secure retirement through homeownership.