The Recession of the Housing Market Explained
Whether you’re a buyer or a seller, you must have felt a big change in the housing market. While during the pandemic, houses and apartments were sold left and right, now there is a lull.
Keep reading to explore what happened to the housing market, why, and what we can expect in the future. Should the recession be so overwhelming that you cannot keep up with your debts, hiring a reputable bankruptcy attorney in San Marcos, CA, could help you get a fresh start.
Why is the housing market in recession?
Much like any market, the housing market is driven by supply and demand. Once the supply decreases or the demand goes up, there is a price increase. In the last couple of years, we’ve seen a steep rise in demand, so supply was increasing to keep up even after the demand slowly started to diminish.
What happens when house sales slow down?
With fewer and fewer sales, we can expect the following:
- Besides increasing construction costs, interest rates go up making homeownership unattainable for more and more buyers. Also, it can lead to financial strain for current homeowners leading to foreclosures and defaults. This in turn makes the supply of available homes even greater.
- Along with the global economic crisis, we can see fewer job openings and more job losses, making disposable income unreachable. This lowers the demand for housing even further.
What can be done?
Mortgage rates sky-rocketed and steep prices keep narrowing the buyers’ pool. The average 30-year mortgage rate reached 6%, which hasn’t happened since the housing market crisis during the Great Recession in 2008. Perhaps due to the recent development, the Federal Reserve could be persuaded to alter the way it’s been dealing with inflation, particularly the interest rate hikes. Otherwise, we’re entering a vicious cycle. The Fed affects your money, and you can see this in savings account rates and credit card debts increasing as well as loans getting more expensive.
What are homebuyers, sellers, and builders doing?
Buyers are opting out of getting their own homes. This in turn makes the homebuilder confidence decline, and it has hit its lowest point since 2014. Sellers have started incorporating incentives to improve the sales, such as free amenities, mortgage rate buydowns, and even price reductions.
Whether you’re a seller or buyer, you must have been hit by all these changes including the impact of the housing market recession. If they have given you overwhelming financial strain you can’t get rid of, you may want to consider filing for bankruptcy. Contrary to popular belief, going the bankruptcy route is not something to fear. It can provide you with debt discharge, financial freedom, and a clean slate.
Which bankruptcy attorney in San Marcos, CA, should you hire?
If you’re considering filing for bankruptcy, but need more information on top of reliable legal representation and experienced professionals, Chang & Diamond are at your disposal. We are the leading bankruptcy lawyers in Southern California. Whether you need our services in Oceanside, San Marcos, or the neighboring communities, you can count on our expertise.
We’ll help you go over your options and decide on the best Chapter for your unique situation. We carefully plan our approach to ensure you get the most benefits – from the initial consultation and document gathering to filing and guiding you through all the proceedings.
Entrust your case to our highly qualified and reliable experts and let us get you back on your feet. Don’t hesitate to give us a call and set up an appointment for your free consultation!