Over the weekend, a client asked me to comment on economist Fred Harrison’s prediction of a housing market crash in 2026. Here’s a great article I suggest you read first.
This is Fred.
First of all, let me admit that I’ve been sounding the alarm since 2020 regarding inflation. Then, albeit early, I’ve been chicken little regrading the stock market since mid 2022. You can check my blogs to verify. The great thing about being pessimistic is that eventually you are correct. The bad part is the opportunities you can miss along the way.
Nonetheless, right now is one of the worst times to buy a home since 2006.
Mortgage rates are high. inventory is low and sellers are demanding a mint.
This chart alone should tell us that something’s about to break. You may not remember 2006, but here in Central Florida it was the beginning of a cratering in home prices. Note the timing, the 2008 super-recession was just 18 months away.
With that context, let’s take a look at Fred’s thoughts on the issue. First, he looks at things in an 18 year business cycle. Essentially, a housing price bust happens 18 years after the last one began. This caused him to predict in 2005, that a crash would happen in 2010. https://cooperative-individualism.org/peddle-francis_review-of-fred-harrison-boom-bust-2005-autumn.pdf. Actually, that’s not completely accurent. He predicted the bottoming in 2010. He called for the beginning in 2007 or 2008.
So, the article above calls for a bottoming of real estate in 2026. One could surmise the beginning of the crash would be 2024 or 2025.
Before reading this article and links included, I hadn’t heard of Fred Harrison. His ideas are worth researching and grasping. Furthermore, we need to remember that 2010 and 2026 will not repeat each other, but they may rhyme. Also, keep in mind that the economy at large and the stock and bond markets act interdependently with real estate and the economy at large.
In the meantime, I’ll do my best to emphasize the data that you may miss.
Related: The Disappearing Mortgage Lenders