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Animation: The housing market’s role in a healthy economy

Animation: The housing market’s role in a healthy economy
Posted at 2:26 PM, Dec 06, 2019
and last updated 2019-12-06 14:31:39-05

Economists are split on whether there will be a recession in the next few years.

Many of them say if there is one, it won't be driven by the housing market like last time.

However, the housing market still plays a key role in a healthy economy, so experts are watching a few things closely, including supply and demand and home values.

Experts predict older Americans will flood the market by putting 21 million homes up for sale over the next 20 years.

But some economists say market forces could decimate demand by then.

And with low demand, sellers will be forced to lower their prices in order to sell.

Experts say the whole process could create a housing bubble, and then, burst it.

Experts are also watching subprime lending. That’s when lenders let people with bad credit borrow money.

Critics argue those loans are more likely to go into default, especially if there’s any hiccup in the economy.

Subprime lending is much lower today than it was before the last housing crisis, but some experts say those rates are still too high.

Experts do say new lending standards could prevent mortgages that helped create the crisis.