When Will The Widely Anticipated Housing Crash Finally Arrive?
webadmin • May 13, 2024
Despite widespread skepticism, home prices continue to move higher in 2024. February witnessed an unexpected surge in home prices, climbing by 0.6%, which is considerably higher than the typical seasonal February slowdown observed in previous years. The real estate market continues to deliver consistent appreciation, as indicated by the CoreLogic S&P Case-Shiller Index, which recorded a 6.4% year-over-year gain, marking its eighth consecutive month of annual increases (see Figure 1 below). This rebound in appreciation marks a robust start to the year, with home prices now 1.3% higher than their peak in June 2022.
RedFin recently published their Home Price Index as well, showing a similar gain of 0.62% for March. It looks like the first quarter of 2024 will come in surprisingly stronger than anticipated.
The main culprits behind the housing market strength are the demand from the massive Millennial generation (the largest since the Baby Boom generation) and the historically low housing inventory. Looking back to the 1980s, we see a national housing inventory of roughly two million homes for sale. Today, that number has fallen to approximately one million.
When analyzed from a simple supply and demand perspective, it's clear why the widely anticipated housing crash hasn’t arrived and is unlikely to arrive anytime soon. Despite the appeal of rising home values, especially to homeowners, current high mortgage rates pose a significant challenge, testing the affordability limits for many potential buyers. However, with new listings experiencing a double-digit jump in many markets and pending home sales ticking 5% to 7% higher through March compared to last year, there are signs of gradual market improvement.
If you’re concerned about affording a new mortgage payment in this market, we recommend working with a mortgage advisor to develop an equity transition plan. The truth is, the reason most people feel stuck in their home today is not because of their low interest rate—it’s because they overlook their global household debt payment and fail to create a plan to use their current home equity wisely and effectively.
It’s a common misconception that when selling your home and buying a new one, all your existing equity should be used as the down payment to minimize your new mortgage. However, consider an alternative: using some of your equity to eliminate all your other debt, such as car loans and credit cards. This strategy reduces your global household debt payment, which can make buying a home much more affordable—even with a higher interest rate.
Creating an equity transition plan and finding a way to lower your global household debt payment is so crucial in today’s market. If you have significant home equity, putting less money down on your new home and instead paying off other debts can drastically improve your financial flexibility and affordability. Ready to take the next step in your real estate journey? Contact us today to discuss how we can assist in developing your personalized equity transition plan, ensuring your success in today's dynamic market.
What This Means for Homeowners and Buyers
If you're a homeowner or potential buyer, these figures represent a mix of challenges and opportunities. The rising prices can translate into significant equity gains for current homeowners, offering financial leverage or the possibility to invest further in the housing market. For buyers, the scenario demands strategic planning, which should include exploring payment reduction strategies like permanent and temporary mortgage rate buydowns.Developing an Equity Transition Plan
For current homeowners, establishing an equity transition plan is crucial. This strategy involves understanding how to leverage your home's equity growth effectively, whether you’re planning to upgrade, downsize, or even consider a reverse mortgage with no monthly mortgage payments as long as you reside in the home. It's about making informed decisions that align with your long-term financial goals.If you’re concerned about affording a new mortgage payment in this market, we recommend working with a mortgage advisor to develop an equity transition plan. The truth is, the reason most people feel stuck in their home today is not because of their low interest rate—it’s because they overlook their global household debt payment and fail to create a plan to use their current home equity wisely and effectively.
It’s a common misconception that when selling your home and buying a new one, all your existing equity should be used as the down payment to minimize your new mortgage. However, consider an alternative: using some of your equity to eliminate all your other debt, such as car loans and credit cards. This strategy reduces your global household debt payment, which can make buying a home much more affordable—even with a higher interest rate.
Creating an equity transition plan and finding a way to lower your global household debt payment is so crucial in today’s market. If you have significant home equity, putting less money down on your new home and instead paying off other debts can drastically improve your financial flexibility and affordability. Ready to take the next step in your real estate journey? Contact us today to discuss how we can assist in developing your personalized equity transition plan, ensuring your success in today's dynamic market.
Here at Luminate Home Loans, we’re always looking for ways to offer more value to our clients and partners. That’s why we’re thrilled to announce that we’re now a wholly owned subsidiary of Luminate Bank®—and soon, we’ll officially transition under the Luminate Bank® name.
For years, homebuyers have been hoping for a return to the ultra-low mortgage rates seen during the pandemic. But as we move through 2025, it’s becoming increasingly clear that today’s rates—hovering between 6% and 8%—aren’t going anywhere.
Luminate Bank® Welcomes Josh Eifert as Chief Financial Officer, Honoring Legacy of Dave Turk [Minneapolis, Minn.] – [2/4/2025] – Luminate Bank® is proud to announce the appointment of Josh Eifert as its new Chief Financial Officer, succeeding Dave Turk, who has played a pivotal role in shaping the company's strong financial foundation. Josh brings a wealth of experience and strategic vision to Luminate Bank, with 26 years in the banking industry. Most recently, Josh served as CFO at Tradition Capital Bank in Edina, Minnesota, where he led the financial strategy during its remarkable growth from $300 million to more than $2.5 billion in total assets. Before his tenure as CFO, Josh contributed to Tradition Capital Bank in other key financial roles. He began his career with Norwest and Wells Fargo Banks, gaining extensive expertise in financial and operational capacities. Luminate Bank's leadership transition reflects the company's thoughtful succession planning, ensuring its financial strategies remain robust and forward focused. Under the leadership of Dave Turk, Luminate Bank has built an exceptional financial infrastructure, delivering consistent results and creating a foundation that positions the company for continued success. Luminate Bank's CEO, Marc Campbell, shared his confidence in the appointment: "Josh not only brings exceptional financial acumen and strategic insight to Luminate Bank, but he also embodies the principles that define our organization: integrity, innovation, and a steadfast commitment to excellence," Luminate Bank's CEO, Marc Campbell, shared with confidence. "His leadership will ensure our financial strategies succeed and inspire confidence across all who depend on us." "I am honored to join Luminate Bank at such an exciting time. The company's remarkable history of financial excellence and its forward-thinking approach align perfectly with my values and vision," stated Josh Eifert. "I look forward to collaborating with the talented leadership team to build on this strong foundation and drive continued success for our customers, employees, and stakeholders." Josh graduated from the University of Minnesota with a degree in finance and completed the Graduate School of Banking at Colorado. CEO Marc Campbell expressed gratitude for retiring CFO Dave Turk's contributions, saying, "Dave has been instrumental in positioning Luminate as a financial leader. His dedication, insight, and stewardship will always be a part of our company's legacy." Josh Eifert will officially assume his role on February 18, 2025. About Luminate Bank® At Luminate Bank, We Open Doors—empowering individuals and families to achieve their financial dreams through personalized service and innovative digital solutions. As a nationwide bank headquartered in Minneapolis, Minnesota, we are committed to helping our clients meet their financial goals with a blend of modern technology, traditional values, and the trusted guidance of experienced professionals. Known for our exceptional commitment to customers, we take pride in delivering a seamless, supportive experience for every step of the journey. Our dedicated mortgage division has branches and a team of loan originators across the US, making expert home financing solutions accessible to communities nationwide. Luminate Bank is committed to safeguarding your money and accounts with FDIC insurance coverage up to applicable limits. Learn more about how we can open doors for you at www.luminate.bank , follow us on Instagram, LinkedIn, and Facebook, or call (952) 939-7200. For media inquiries, please contact: Debbie Schwake, CMO debbie.schwake@luminate.bank
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