housing market collapse

A housing market collapse occurs when property prices drop significantly, leading to a sharp decline in home values. This often happens due to factors like excessive lending, high mortgage default rates, and economic downturns. As home values fall, homeowners may owe more than their houses are worth, increasing foreclosures. This decline can reduce consumer wealth, slow spending, and cause financial instability for banks and investors holding mortgage-backed assets. Consequently, a housing market collapse can trigger broader economic downturns, impacting employment, borrowing, and overall economic growth.