Is The U.S. Housing Market Really The Worst It's Ever Been?

Housing market anxiety is a major concern among many adults and young adults who remember the devastating effects of the 2008 market crash. Science Daily's 2019 study on the lasting psychological impacts of the Great Recession revealed that "Individuals who experienced even a single recession impact still had higher odds of nearly all of the adverse mental health outcomes we examined — including clinically significant symptoms of depression, generalized anxiety, panic, and problems with drug use."

With a new generation of young potential homeowners who witnessed firsthand the experience the crash had on their families and the economy, housing anxiety is at an all-time high. A recent poll conducted by Fannie Mae revealed that Fannie Mae's Home Purchase Sentiment Index went down 2.4 points to 71.8 in January of 2022. General sentiments from the poll show that many potential homeowners are anxious and insecure about entering the housing market as buyers. That being said, the market is heavily leaning towards sellers.

The recent pandemic has inarguably made the U.S. economy somewhat fragile, with supply chain issues still keeping items out of stock, the prices of common household objects and groceries skyrocketing, and the cost of living increasing. As stimulus checks and economic aids have ceased, people are becoming concerned. This phenomenon has not spared the housing market. Over the past decade, housing prices have risen 30%, with income only increasing by 11%, per CNBC.

The Fannie Mae HPSI revealed that people are not eager to buy right now, with people saying it's a good time to buy going down from 26% to 25%, and people saying it's a bad time to buy increasing from 66% to 70%. The amount of people who expect mortgage rates to go up has also increased from 56% to 58%. A large part of this anxiety comes from the scarcity of houses available. Housing inventory is dwindling rapidly, so the prices are rising higher and higher.

The market is more attractive for people looking to sell their house, though, since they are in possession of a valuable commodity. That being said, the HPSI report revealed people still have anxieties around selling, the number of people saying it's a good time to sell decreasing from 76% to 69%. While there are few reports about the current state of the housing market due to its constant fluctuation, the sentiment still stands that it's a difficult time to dabble in the housing market.