The United States housing market found itself at the center of the 2007-2008 financial crisis, which triggered the Great Recession. At the time, experts and analysts labelled it as the most devastating financial meltdown since the Great Depression in the 1930s. Unfortunately, US housing is now suffering its slowest year since that crucial year of 2008. Should you be worried about history repeating itself? Let’s jump in.
In the U.S., the National Association of Realtors (NAR) reported that, at its current pace, total existing-home sales in 2023 are projected to amount to 4.1 million. This would represent its lowest number since the subprime mortgage crisis of 2008. Despite the sharp dip in sales, property remains expensive in some of the country’s most desirable metropolitan areas. Indeed, the NAR reported that median home prices as of August had increased 4% in the year-over-year period.
So, while sales numbers are troubling, the high price of homes indicates that there is still strong demand even as consumers are being squeezed by a series of aggressive interest rate hikes from the U.S. Federal Reserve.
Investors should not panic in this environment, but they should also remain vigilant as rising interest rates have applied immense pressure on borrowers. It is a good idea to keep an eye on an online lending stock like LendingTree (NASDAQ:TREE), as well as a top financial institution and mortgage borrower like Bank of America (NYSE:BAC).
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