In Part 1 of our series on housing crash anxiety, we spoke with Lisa Sturtevant, Chief Economist of Bright MLS, who explained to Inman that the market is entering a gradual correction phase, not a 2008-style crash.
Today, we turn to Ricky Carruth, Chief Housing Analyst at RLTYco. Like everyone we spoke with for this series, Carruth emphatically stated that a housing crisis isn’t imminent for several reasons.
Ricky Carruth
But Carruth also had some interesting things to say about why the current housing market slowdown could lead to a booming market over the next decade.
Doomers are nothing new
Carruth didn’t pull any punches when discussing why talk of a housing market crash has circulated recently. “I think many people are praying for a crash,” Carruth told Inman. “Buyers want one, sellers don’t — but more people probably want a crash right now.”
The phenomenon of “doomers” warning of crashes isn’t new, of course.
Across history, every major economic cycle has produced its share of pessimists warning that a collapse is just around the corner. From the Tulip Mania and the South Sea Bubble to the lead-up to the Wall Street Crash of 1929, skeptics have consistently called out what they saw as unsustainable market conditions.
A small group of analysts correctly anticipated the 2008 financial crisis, as depicted in Michael Lewis’ 2010 book, The Big Short. But for every accurate prediction, many others have come too early or missed the mark entirely.
That’s partly because markets are cyclical. Booms invite scrutiny, and the possibility of a downturn creates a constant audience for bearish forecasts. In today’s hyperconnected media environment, those predictions travel further and faster, amplified by social media platforms where worst-case scenarios tend to outperform more measured analysis.
Carruth said that, more recently, this age-old sentiment has fueled a wave of dire predictions on social media and YouTube since 2022, with some commentators forecasting steep declines in national housing prices. Carruth pointed to recent claims — including one high-profile prediction of a 50 percent drop in home prices by 2026 — as examples of narratives that have gained traction despite contradicting current market data.
Stronger fundamentals than 2008
Carruth argues that comparisons to the 2008 housing crash overlook a fundamental shift in how mortgages are underwritten today. “Dodd-Frank changed everything,” he said. “Lending standards are much tighter. The average credit score of homeowners today is significantly higher than it was back then. Buyers today are overqualified in many cases.”
That tightening, combined with historically high levels of homeowner equity, creates a buffer against the kind of widespread distress that defined the last crash.
“I can’t think of a scenario where we see a major home price crash,” Carruth said. “Back in 2008, homeowners had no equity. Today, they have a lot of it.”
Even in the event of a broader economic downturn, Carruth expects the impact on housing to be limited. “If we go into a recession, it doesn’t necessarily mean housing collapses,” he said. “It likely just pulls back inventory.”
A transaction slowdown, not a price collapse
While Carruth dismisses the idea of a price crash, he acknowledges that the market is under pressure in other ways. “There’s no price crash, but we are in a transaction crash,” he said, pointing to affordability constraints, elevated mortgage rates and broader economic uncertainty.
He said that concerns about artificial intelligence’s impact on employment and geopolitical instability — including the war in Iran — have all contributed to buyer hesitation in recent months.
Those pressures have slowed activity, but Carruth argues that, historically, home prices have adjusted just enough to sustain a baseline level of sales. “In a housing recession, the U.S. has never fallen below about 4 million existing home sales annually,” he said. “Prices will adjust to whatever they need to hit that number.”
That doesn’t necessarily mean sharp declines. “It could mean flattening. Some markets are down. But that’s a correction, not a crash,” he added. “There’s a big difference.”
‘Demand is getting bottled up’
For a true housing crash to occur, Carruth said several conditions would need to happen simultaneously, and none are present today. “You would need a flood of foreclosures, forced sellers and no buyers,” he said. “That’s just not the reality right now.”
Instead, the market is being shaped by constrained supply and delayed demand. “When demand pulls back, it doesn’t disappear; it builds,” he said. “It’s like turning off a faucet. When it turns back on, the pressure is even stronger.”
Demographics are also playing a role. Carruth pointed to a large cohort of Gen Z buyers entering their prime homebuying years as a key driver of long-term demand.
Experts estimate pent-up housing demand by comparing current millennial and Gen Z headship rates — the share of people who form their own households — with those of similarly aged cohorts from 2010 to 2014.
The gap between today’s rates and that earlier baseline points to a sizable shortfall. Roughly 1.82 million households that would likely exist under prior conditions never formed, held back by limited inventory and worsening affordability.
Put another way, there are nearly 2 million “missing” households among 18- to 44-year-olds compared to what demographic trends would normally produce.
“There are more thirty-somethings than ever who want to own homes,” he said. “That demand is getting bottled up.”
Rates, geopolitics and the road ahead
Recent volatility in mortgage rates has added another layer of uncertainty. Carruth said the housing market had begun to regain momentum earlier this year as rates dipped, but that progress was disrupted by geopolitical developments.
“The war in Iran really put a wrench in things,” he said. “Rates were coming down, then they shot back up after the conflict escalated and the jobs report came in weak.”
Still, he sees those disruptions as temporary rather than structural. “I really hope this war in Iran ends soon, and if it does, we will be in very good shape,” Carruth said.
Looking further ahead, Carruth expects the housing market to expand over the next decade, even as the industry itself undergoes transformation. “The next 10 years will be historic,” he said. “We’ll likely see fewer agents because of technology and AI, but more transactions and higher prices.”
That shift, he added, will concentrate opportunity among top performers. “The top 10 percent of agents will make more money than they ever have,” Carruth said.
