Is the Housing Market going to Crash?

Is the Housing Market Going to Crash? What the Experts Say

Scary headlines and social posts keep saying the housing market is about to crash. If you've seen them, it makes sense to worry about California home values. But here's the simple truth.

The data does not point to a crash. It points to slow, steady growth. Every area is a little different, including here in the Central Valley. Some places may see prices rise faster than others. A few may even see small, short dips. But the big picture is clear. Experts expect California home prices to keep rising over the next five years.

What the Experts Are Forecasting

Each quarter, Fannie Mae runs the Home Price Expectations Survey (HPES). It asks more than 100 housing experts where they think prices are headed. In the latest survey, they agreed that home prices across the country should keep going up through at least 2029. That includes insight for California and the Central Valley.

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Here's how to read this chart. Each bar shows prices going up, not down. The only thing that changes is how fast they rise each year.

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The experts' forecasts fall into three groups: the average, the most hopeful, and the most cautious. Even the most cautious group expects prices to grow about 5% over the next few years:

• On average, prices are expected to rise about 15% between now and the end of 2029.
• The most hopeful experts expect about 26%.
• Even the most cautious expect about 5%.

Here's the key point. None of these groups expect a crash or a drop in prices over the next five years. That goes for the whole country and for local California markets.

How This Compares to a "Normal" Market

The forecasts call for prices to rise about 2% to 3.5% a year for the next five years. Over the last 25 years, the average was closer to 4% to 5% a year.

So the new pace is a little slower than normal. But it's much healthier than what we saw from 2020 to 2022. Back then, there weren't enough homes for sale and lots of people wanted to buy. Prices shot up too fast, and some areas saw jumps of 15% to 20% in a single year.

The market may feel slow right now compared to those wild years. But really, it's just settling into a healthier, more balanced pace.

Why Prices Aren't Expected to Collapse

A lot of the worry comes from how fast prices went up, plus the old saying, "what goes up must come down." But that's rarely been true for housing. Over time, home prices almost always go up, and California is no different.

The main reason we're not headed for another 2008 is simple: supply and demand. Even with homes being hard to afford right now, there still aren't enough homes for everyone who wants to buy. That shortage keeps pushing prices up, across the country and here in the Central Valley.

Experts agree that we're not looking at a price collapse. We're looking at steady growth over time. And over the past 50 years, even when the economy shifted, the housing market has always bounced back. Right now, we're heading into that kind of recovery.

Bottom Line

If you've put off buying or selling because you're afraid of a crash, it's time to look at the data, not the headlines. The real question isn't if home prices in California and the Central Valley will go up. It's by how much.

Let's talk. We can walk you through what's happening in your local market, what these forecasts mean for your next step, and how our local loan officers at Lend Mortgage Solutions can help.

We keep our loan options clear and honest. Our goal is simple: help you feel confident about your next move, in any market.

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Keep reading: Thinking about buying a rental while the market stays steady? Take a look at our Investor DSCR loans. Self-employed? A bank statement loan may be a fit.