Is the Housing Market Going to Crash in 2019?

Is the housing market going to crash in 2019? Bloomberg economists recently determined which housing market is most at risk of a housing bubble.

Anyone who’s had an eye on real estate has been asking themselves this question: Is the housing market going to crash in 2019? The short answer: not likely.

According to a recent report by Bloomberg Economics, the U.S. is the 14th most unsustainable housing market in the world. Bloomberg economists studied the ratios of house prices to rent and income as well as inflation-adjusted prices and household credit to create a “housing bubble dashboard.”

Which Housing Markets Are Most at Risk of Housing Bubbles?

If you’re looking for a housing bubble, Canada and New Zealand have the least sustainable (meaning, least affordable) housing markets. The cost of housing compared with wages in Canada and New Zealand are the highest in the world. Austria, Norway, Sweden and the U.K. draw concern as well. Here is a list of the twenty housing markets around the world that are most at risk of housing bubbles:

Canada
New Zealand
Sweden
Norway
Australia
Belgium
U.K.
Netherlands
Ireland
Denmark
Spain
Austria
France
Euro area
U.S.
Switzerland
Portugal
Finland
Germany
Greece

“There’s a risk that a global round of monetary easing may fuel housing bubbles,” said Niraj Shah, Bloomberg economist, “While central bankers are focused on avoiding a global economic downturn, looser monetary policy could sow the seeds of the next crisis.”

House Prices Return to Pre-Recession Peak

In the U.S., home prices shot up a cumulative 50 percent between June 2009 to May 2019, according to research by CoreLogic. Single-family home prices surged above 30 percent over the same decade. Wages rose as well, but at nowhere near the same pace, reaching a 10-year high of 3.4 percent in February.

Coupled with sluggish recovery in housing construction and stricter banking rules, the U.S. is left with an affordability crisis. Those on the west coast, particularly in tech hubs like San Francisco, are grappling with home values more than five times median household income.

Is the Housing Market Going to Crash in 2019?

It’s hard to say with certainty if/when the U.S. housing market is going to crash. Most experts agree that a recession is looming – if for no other reason than the current expansion, admittedly fueled by super-low interest rates, is the longest in history. Economists, fund managers and strategists said there is a 23 percent chance of a recession in 2019 in a survey by CNBC Fed.

“Traditional signs of a U.S. recession from the shape of the yield curve to a fall in housing investment to corporate bond spreads are suggesting a recession in late 2019/early 2020,” wrote Constance Hunter, chief economist at KPMG, in response to the survey by CNBC Fed.

Ilyce Glink, publisher of ThinkGlink.com and author of many books on real estate including 100 Questions Every First-Time Home Buyer Should Ask, says consumers must be ready whenever the recession arrives. She put together a list of four ways Americans can prepare their finances ahead of an economic downturn.