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Is the housing market on the verge of a “meltdown”?
That’s the question that has been making rounds in the real estate industry and beyond.
Elon Musk, CEO extraordinaire of Tesla and master of controversy, took to Twitter, the social network he purchased last year, to proclaim that “commercial real estate is melting down fast. Home values next.”
The twitterverse lit up with over 1,300 retweets and more than 10,000 likes in just a day.
However, industry experts have been skeptical of Musk’s housing market prediction. Glenn Kelman, the CEO of Redfin, known for his active presence on Twitter and his past efforts to debunk misinformation, argued that residential and commercial real estate are simply not the same beasts.
He pointed out that the residential side is still experiencing a seller’s market, with inventory levels at about two-thirds of pre-pandemic levels during a strong seller’s market period from 2016 to 2019.
Experts agree
Other experts in the real estate industry agreed with that assessment. Byron Lazine, broker and founder of Broke Agent Media, also known as BAM, admitted that while he’d trust Musk on topics like space travel or electric cars, the residential real estate realm is a whole different ballgame.
He stated that homeowners today are in a much stronger position compared to the homeowners during the Great Recession in 2008. Emphasizing that homeowners have more equity, lower mortgage rates, and a more stable financial footing, making a housing market meltdown unlikely.
While Elon’s prediction has garnered a lot of attention, there are others who share similar concerns about the real estate market. Figures like Dave Burt, the investment wizard chronicled in the book and movie “The Big Short.” recently made waves by suggesting that flooding from climate change could trigger a major correction in the real estate market, and JPMorgan Chase CEO Jamie Dimon, hinted at a bumpy ride for banks with exposure to commercial real estate.
However, the general consensus among industry experts is that the current market conditions are different from those that led to the Great Recession, and the housing market remains resilient.
Under pressure, but maybe not a collapse
Realtor.com analyst Hannah Jones chimed in to point out that demand remains high, while supply is low, indicating that the housing market is under pressure but not on the verge of collapse.
So, if you’re wondering whether it’s time to panic about a housing market meltdown, the answer from industry professionals seems to be a resounding no and we agree!
until next time, happy house hunting!
