Don’t wait for the housing market to crash to buy a home. Here’s what to do instead.

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• Experts overwhelmingly say that the housing market isn’t going to crash anytime soon.
• The last housing crash helped cause today’s lack of supply, which is what’s keeping prices from falling.
• Mortgage rates, however, are expected to fall next year. This will help make homeownership more affordable.

Thanks to high mortgage rates and even higher home prices, the mood among hopeful homebuyers has never been bleaker. In Fannie Mae’s most recent National Housing Survey, only 14% of consumers said they think it’s a good time to buy a home — a survey low, the mortgage investor says.

Home prices increased nearly 4% year over year in September, according to the S&P CoreLogic Case-Shiller Home Price Index, and many housing market predictions expect them to continue increasing in 2024. 

“For the potential buyers on the sideline, it will be a bit of bad news,” Lawrence Yun, chief economist at the National Association of Realtors, says of next year’s housing market. In 2024, homebuyers will likely see increased competition and multiple offers on homes, he says, driving up prices further.

This challenging housing market has many would-be buyers wondering if home prices will ever go down, or if they might crash in the near future. Some are even hoping for it.

According to a recent LendingTree survey, 44% of Americans believe that the housing market could crash next year, and over a third say they want the market to crash, believing it’s their only way to be able to afford a home.

Is there a chance the housing market will crash anytime soon? And if it does, will that make homes more affordable for first-time homebuyers?

Is the housing market going to crash in 2024?

Though a large number of Americans believe the housing market is at risk of crashing, the economists who study housing market conditions overwhelmingly do not expect a crash in 2024 or beyond.

The latest housing market predictions for 2024 from some of the top industry groups see home prices increasing somewhere between 0.7% to 4.1% year over year. Realtor.com’s forecast does predict that home prices will fall, but only by 1.7%, which wouldn’t substantially increase affordability for buyers.

Why are economists so sure that home prices won’t crash?

“[There’s] just simply not enough supply,” Yun says. “So the economics of supply and demand, if there’s a shortage, prices simply cannot crash.”

The US is currently between 2.3 million and 6.5 million units short of a healthy housing supply, according to Realtor.com. Even if something happened that caused a lot of homebuyers to drop out of the market, demand likely still couldn’t drop low enough to push prices down.

How the last housing market crash helped create today’s conditions

While it’s perhaps understandable that some hopeful buyers feel their only chance to become homeowners is for the market to crash, they might not realize that the last crash is part of how we got into this situation in the first place.

In the mid-2000s, many lenders were offering mortgages to high-risk borrowers without asking for proper documents needed for a mortgage application. At the same time, home builders were rapidly building new homes to meet increasing demand.

“Home builders were producing right and left, so much home construction,” Yun says. “It was one of the most active supply-producing situations. So we had an oversupply.”

When the housing market crashed, leading to the Great Recession, it destroyed the home-building industry. Many companies went bankrupt, and a lot of builders permanently left for jobs in other industries. 

In the years that followed the recession, the industry struggled to recover, and few homes were built as a result. Now, more than 14 years after the end of the Great Recession, homebuyers are still feeling the effects of the last crash. 

What a housing market crash would mean for homebuyers

Anything is possible, and nobody has a crystal ball to see for certain what will happen in the housing market in the coming months and years. If the market theoretically were to crash, would that make it easier to buy a home?

It’s possible, but it depends on what caused the crash in the first place. If it’s anything like the last crash, where many workers lost their jobs, taking advantage of lower home prices won’t be possible for many homebuyers. And given the current supply conditions, it’s highly unlikely that we’d see prices fall significantly without there being a larger economic fallout.

How to buy a home in a challenging market

So what’s a homebuyer to do? Instead of hoping for lower prices, here are some things you can do to achieve your homeownership dreams in 2024.

Expand your search

If you can’t afford to buy in your current city, consider looking elsewhere. Talk to a local real estate agent to find out if you can find more affordability a few towns over. Many times, average home prices can differ quite a bit from one zip code to the next. Just be sure to also consider other factors before you move to a new area, such as your commute to work and whether you want to be in a certain school district.

If you live in a high-cost metro area, moving out of the city can make homeownership significantly more affordable.

“For those who have some flexibility to go further out into the suburbs exurbs or even smaller towns, the next county, there’s better affordability,” Yun says.

Wait for mortgage rates to fall

The one good spot of news for homebuyers is that mortgage rates are expected to go down in 2024. While Yun says we likely won’t see a return to the historic lows borrowers enjoyed in 2020 and 2021, but 30-year fixed rates could end up somewhere in the 6% to 6.5% range.

Lower mortgage rates mean more people will be able to afford to buy a home. As rates fall, you could potentially save hundreds of dollars per month on your mortgage payment.

Get as much help as you can

Mortgage lenders are increasingly offering incentives to entice prospective borrowers, and many of the best mortgage lenders for first-time buyers offer things like down payment assistance or interest-rate buydowns to help borrowers get into a home.

Make sure you’re taking advantage of all the assistance available to you. Look for first-time homebuyer loans and grants offered by lenders, as well as down payment assistance offered by your state or municipality.

Housing market crash FAQs

Molly Grace

Mortgage Reporter

Molly Grace is a reporter at Insider. She covers mortgage rates, refinance rates, lender reviews, and homebuying articles for Personal Finance Insider.
Before joining the Insider team, Molly was a blog writer for Rocket Companies, where she wrote educational articles about mortgages, homebuying, and homeownership.
You can reach Molly at [email protected], or on Twitter @mollythegrace.

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