Online Theories Create Scaremongering
The issue with online conspiracy theories is that anyone can come up with an idea and post it on the internet, and regardless of whether it is based on fact or fiction, there will be some people who believe it.
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This is what happened to one couple in Denver, Colorado. Shane and his wife had seen some theories online that the housing market in their city was due to collapse in the next six months and had leaned into the doom and gloom of the headlines.
The Sentiment Gap
Consumer sentiment measures the economy’s overall health and is determined by consumer opinion. It takes into account things such as people’s feelings toward their finances, the economy’s short-term health and its long-term growth prospects.
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This means that when gross domestic product growth and low unemployment occur, consumer sentiment usually rises. However, economists have recently noticed that this is no longer the case.
COVID-19 and the Housing Market
Four years after the start of the COVID-19 pandemic, people are still feeling its effects. It initially caused house sales and construction to halt, but drastic changes occurred once the market reopened.
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The average price of a house in March 2020 was $280,000. By July 2023, this number was $406,700. The pandemic caused so much confusion regarding the housing market, and some people appear to still be a little confused and struggle to distinguish fact from fiction.
Social Media Boosts Negative Feelings
The rise in negative feelings toward the economy is mostly due to social media. Nowadays, people constantly see streams of negative news—to the point where they can never get a break from it.
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Even if there is some truth to the negative news that circulates on social media, many will take different viewpoints of the truth and share them, which creates scaremongering among the population and spreads disinformation around quickly.
Not Letting Fears Dictate Decision-Making
When people constantly look at streams of negative news, this can create fearmongering in the general population and can often lead to people making poor decisions based on their fears.
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Instead, they need to step back and search for the facts before believing everything they see online. Only once they know the facts should anyone make a decision, especially one as big as buying or selling a house.
Prices Are Too High
Another reason consumer sentiment appears to be at an all-time low is that the prices of everything are at record highs.
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Even though inflation levels are starting to fall, prices are still high, so people don’t have much hope for their current or future prospects. Combined with people not earning enough to cover the cost of everyday items, this has left many without much hope for the future.
Homeowners With Prospects Are Worried
With many who want to own a home worried about how they will ever be able to afford it, they aren’t the only ones, as even homeowners with great prospects are still worried due to online conspiracies.
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Shane purchased his house for $500,000 in 2021. It is now predicted to be worth around $700,000, and due to mortgage repayments, he and his family now only owe $280,000 on the loan. They have no other debt and $100,000 in savings, but the negative headlines and online conspiracies still worry them.
Look at Facts, Not Fiction
Ramsey, who hosts a podcast with his daughter, encouraged Shane to focus more on the facts and figures circulating on the internet, as opposed to conspiracies shared by people who don’t know what they’re talking about.
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He even pointed out that there appears to be absolutely no evidence of a housing crash in Denver potentially happening within the next six months and that Shane has nothing to worry about.
Housing Shortages Will Cause Values to Rise
There is a gap in the U.S. housing market, as not enough houses have been built over the last decade to keep up with the growing population.
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As there is a higher demand than there is in supplies, Ramsey believes that this will cause current housing prices to rise. He even encouraged Shane to hold off from selling his house for at least another year as the price will rise further.
Looking at Basic Economics
Many people believe that as interest rates have gone up, the housing market is likely to crash soon. They believe that when this goes down, it will be a good time to buy a house as the prices will be lower.
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Ramsey says this simply isn’t true. He says that economics works like this: If there are more than enough homes for people, housing prices will go down. However, if there is a housing shortage, prices will go up. It’s all about supply and demand.
U.S. Housing Market Predictions
Despite housing supply having been at an all time low over the last few years, a bit more supply is currently coming back onto the market. More buyers are also returning to the market, who had previously been waiting for interest rates to go down or for a crash to happen.
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Well, a crash didn’t happen, and house prices went up. While this might still be a bit of a struggle for those trying to get onto the property ladder, it’s great news for those who want to sell their homes.