A couple points - This is not investment advice, just a perspective, guided by very recent history and basic due diligence with property investments;
- Sensible for you to decide whether you're aiming to purchase an investment property or a homestead.
- I'm going to assume in this post it's the former (I have more IRL experience there).
- Please have a good read about the mid 00's housing crash, at least three times. This is absolutely vital reading for anyone contemplating an investment in the property sector.
- Fundaments wise, property (a traditional hedge against currency inflation) is being snapped up by retail and institutional entities in many countries. Some people who'd received stimulus checks are attempting to 'smartly' game the system by investing in property with COVID related fiat payouts.
- The US average Home Price Index is still rising and 'topping'; in trade-speak, we're somewhere between a 37.5-50% Fib retracement from the previous trough of 308, so we're likely in overbought conditions (ie. not a wise time to buy a saturated market): https://fred.stlouisfed.org/series/USSTHPI
Some readers may balk at my utilisation of technical trade indicators here - This is not rational (technical indicators are just that; newbs use them as sure-fire trade signals, fatal misunderstanding).
- Note the HPI's acceleration in recent quarters - This is a direct reflection of retailers and institutions doing precisely as described in bullet point 2.
- Consider your area. Refer to the HPI for said area. Treat it as your 'technical' analysis to supplement whatever 'fundamental' analysis you do (eg. gentrification, recent investment from larger entities in said area, safety, insurance, 'sellability' if you ever decide to cash out).
In terms of the probability of a housing market crash, I suspect there will be a major correction (perhaps up to 30-50% reduction in value from wherever the future top is) within the next generation. People are purchasing property, in part, for speculative investment purposes - A lot of these people won't realize their ideal returns, for various reasons. This will result in a gradual sell-off, which may (or may not) accelerate, depending on the overall housing market condition.
I'm generally very bearish on the integrity of the US as a cohesive nation, and - in addition - I envisage a large proportion of the over 60 year olds who own property (they are over-represented for obvious reasons) will unfortunately succumb to either morbidity associated with native COVID infection, or excess mortality from any delays relating to receiving timely treatment (the pandemic meant that millions in the world have had cancer progression, untreated diseases, late heart attacks etc.).
A market crash (in the truest sense) would only really occur if adverse market psychology kicks in (panic selling)
IF excess mortality is realized, and it coincides with both a coincidental downturn in the market, with some other major background factor (I would bank on sociopolitical instability). An artificial flash-crash triggered by foreign actors (namely the Communist Chinese) also can't be ruled out.
A nice safe purchase would be a multi-apartment block in a relatively safe US state situated near a major resource (eg. hospital, college, network route if in a satellite town near a city), with a fixed rate loan (which you could always pay forwards quicker), then renting that sucker out for another 15-20 years.
Whatever you (and readers) do - Good luck, don't feel rushed into a decision, due diligence always trumps frenetic action.
