Chart of the Week - US Housing Better and Worse
- Callum Thomas
- Oct 4, 2022
- 1 min read
Housing Market Risk: The US housing market is both better and worse than pre-financial crisis. On the one hand debt to income ratios have come down a lot — meaning less leverage and therefore less likelihood of negative equity, defaults, credit stress, and systemic risk to the banking system.
Borrowers also have a greater likelihood of having fixed their interest rate, with much less exposure to variable rates this time around.
However — house purchasing power goes down as rates go up. Regardless of mortgage stress, this mathematical fact naturally acts as a sinking lid on house prices.
This is particularly interesting when you realize US housing market valuations have surpassed the extremes of the subprime bubble. So maybe we see less stress given less leverage, but we still likely see a material correction as rate shock meets stretched valuations. At the very least this will act as a clear headwind to growth/confidence.
Key point: US housing market is less leveraged, but more expensive vs pre-08.
NOTE: this post first appeared on our NEW Substack: https://topdowncharts.substack.com/
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Callum Thomas
Head of Research and Founder of Topdown Charts
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Great insight into how the market can be structurally stronger yet still vulnerable to price corrections. The reduced reliance on variable rates is a big plus, but high valuations in a rising-rate environment definitely create a ceiling for growth. This is where detailed cost control becomes crucial especially for builders who depend on Lumber Estimating Services to keep material costs in check and maintain profitability despite shifting market conditions.
A sharp and well-balanced perspective on today’s housing market. Lower leverage definitely reduces the risk of a financial crisis repeat, but stretched valuations combined with higher interest rates can’t be ignored. Affordability is clearly the pressure point now, and that alone can slow momentum. For developers and investors, this kind of environment makes precise planning essential especially when relying on Construction estimating services Tx to manage costs, adapt to market shifts, and avoid surprises in a tightening landscape.
A really insightful breakdown of the current housing dynamics. It’s interesting how reduced leverage lowers systemic risk, yet elevated valuations and rising rates still create pressure on affordability and demand. That balance between stability and potential correction is something many investors seem to underestimate. From a planning perspective, this is where accurate cost forecasting becomes even more critical especially for builders and developers relying on Construction Estimating Services to navigate uncertain pricing, control budgets, and make smarter investment decisions in a shifting market.
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