The housing market in the United States could potentially see a "massive" bubble burst following an influx of new homes, a real estate analyst forecasted Monday.
During the COVID-19 pandemic, many Americans migrated to Southern states in hopes of purchasing cheaper homes following the lockdowns. In response, home builders escalated construction to meet the demand, which has since slowed down.
Nick Gerli, CEO of Reventure Consulting, said the waning demand has left many homes in the market, creating a "massive housing bubble" that could burst soon.
"A massive housing bubble has developed, and is about to pop, in the South. The number of new homes for sale in the Southern Region (FL, GA, TN, TX, etc.) has spiked up to nearly 300,000. This is the highest level of all time. Even higher than the previous bubble peak in August 2006. Before the massive crash," Gerli wrote in a post on X, formerly Twitter.
"Home builders and investors rampantly speculated in this housing market the last 3-4 years. And prices went far above what locals can afford. And created a bubble. Now that bubble is - slowly - popping. And it could start to pop pretty fast if a Recession is thrown into the mix," he added.
A massive housing bubble has developed, and is about to pop, in the South.
The number of new homes for sale in the Southern Region (FL, GA, TN, TX, etc.) has spiked up to nearly 300,000.
This is the highest level of all-time. Even higher than the previous bubble peak in August… pic.twitter.com/bVB9vCQl4I— Nick Gerli (@nickgerli1) July 8, 2024
What Other Experts Say
Predictions on whether a housing market crash could happen vary widely. For instance, Chris Vermeulen, founder of The Technical Traders, said the market is on the verge of a steep price correction, adding that both residential and commercial properties could see prices plunge about 30%.
"People are going to have to start to sell their homes," Vermeulen told Business Insider in an interview. "What we're starting to see is people starting to realize they can't afford their mortgages, or they need to downgrade. A lot of people are struggling financially, and this is really the tip of the iceberg. Give it another two or three years - that's when the real-estate market gets hit the most."
In contrast, Selma Hepp, chief economist of real estate data analytics firm CoreLogic, told Yahoo Finance that a crash is unlikely "unless there is a significant surge in the rate of unemployment."
Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors, shared Hepp's sentiment, agreeing that there are currently no indications that a housing market crash is imminent.
"There is a housing shortage and ongoing job creation. I would worry if there was an oversupply and if we were in a job-cutting recession, but that's not the case today," Yun told Yahoo.
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