What causes a housing market to crash?


What causes a housing market to crash?

In: 1

Generally it simply boils down to the time it takes to build a house. Demand increases so price does,as price gets up it becomes more appealing for developers to buy land and build housing developments.. this continues and eventually demand is met, prices level out, but many still have projects being built, by the time all the in progress construction is complete it has now tipped to supply being greater than demand so prices start to crash. Then 15 years later it repeats.

A lot of factors. The crash of 2008 was mostly due to illegal and/or unethical business practices. Regulation is in place now to theoretically prevent those practices.

Supply and demand is one major factor. So is unemployment. Political instability, inflation, force majeure (“acts of God”) like war, weather, pandemic, etc.

A “crash” would be a combination of a lots of factor. The market ebbs and flows with any one factor.

2008 was it’s own thing… But in general, people buy like crazy, causing prices to go up. Then prices get so high that people stop buying. Prices crash, people end up “upside down” with debt higher than the value of the home. People then can’t sell, lots of default and bad debt.