The American housing market was a bright spot through the economic calamity of 2020. As other economic problems rose due to COVID-related lockdowns, the housing market seemed to dwell in an alternative reality, with average single-family home prices up 13% compared to end-of-2019. This overheated market, mixed with the economic depravity in so many other areas of U.S. life, has observers wondering whether we are headed for a crash, a la the Great Recession. There are arguments for and against this position.

The case against a crash

There are all kinds of indicators that the housing market—marked by a whopping $350,000 median sales price—will not crash. Interest rates remain low, and Federal Reserve Chairman Jerome Powell suggests that any increase will be gradual; he has called for at least two rate hikes by 2023, but the timing and extent of the increases are unclear, while the Fed has resisted hikes this year…

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