The Housing Crisis Unfolding: A Big Hit Expected in September 2025

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The housing market is in serious trouble, and I believe we’re heading toward a major downturn, with September 2025 likely marking a critical tipping point. I’ve been looking into the numbers, and the situation is alarming. Let’s break it down in simple terms so we can all understand what’s going on and what might happen next.

Right now, the housing market is already struggling. As of April 2025, sales of existing homes hit their lowest pace in 16 years, according to the Wall Street Journal. That means fewer people are buying homes than they have in over a decade and a half. At the same time, there’s an oversupply in some areas. For example, in Oahu, the condo market has 6.8 months of inventory, way above the normal 2 months, per the Honolulu Board of Realtors. Too many homes sitting unsold is a red flag for what’s coming.

One of the biggest issues is that a lot of homeowners are behind on their mortgage payments, but they’ve been given a temporary lifeline through forbearance programs. These programs allow people to pause or reduce their payments if they’re struggling financially, and they’ve been extended through September 2025. On the surface, that sounds like a good thing because it’s keeping people in their homes. But here’s the problem: once September rolls around, those programs end, and homeowners will have to start paying again. For many, that’s going to be impossible. AI models are predicting 1.1 to 1.3 million foreclosures by Spring 2026, and I think we’ll see the wave start right after forbearance ends in September.

When that many foreclosures hit, it’s going to be a disaster for the housing market. All those homes will flood the market, driving prices down hard. We’re already seeing this in some places. For instance, in Austin, someone on Reddit reported their home’s value dropping by $100,000. Falling prices hurt homeowners trying to sell, and they also hit the real estate sector as a whole. Companies that manage properties, real estate investment trusts, and other real estate stocks will take a big hit as the market gets swamped with supply and demand dries up.

The broader economy isn’t helping either. Global growth is slowing down, with J.P. Morgan Research projecting just 1.4% GDP growth by the end of 2025, down from 2.1%. A weaker economy means fewer people can afford to buy homes, which makes the housing problem even worse. Consumer confidence is already shaky, according to Fannie Mae’s National Housing Survey, and a wave of foreclosures will only make that worse. People losing their homes aren’t going to be out there spending money, and that drags down the whole economy.

There’s another layer to this mess: something called the “lock-in” effect. Interest rates are high right now. The 30-year Treasury yield is at 4.5% as of May 2025, per Bloomberg. That’s making mortgage rates high too, which means people who locked in low rates a few years ago don’t want to sell their homes. Why would they give up a 3% mortgage for a 7% one? As a result, the number of single-family homes for sale is 20% below historical lows, according to J.P. Morgan Research. So, we’ve got too many homes in some places, not enough in others, and a huge wave of foreclosures about to hit. It’s a perfect storm.

I think September 2025 is when this really starts to take a toll. That’s when the forbearance programs end, and foreclosures will likely start spiking. More foreclosures mean more homes for sale, which will push prices down even further and drag the real estate sector into a steep decline. Real estate stocks, which are already sensitive to housing market health, could see a drop of 10 to 15% in the last few months of 2025 if this plays out. And if the economy keeps slowing, the ripple effects could be even worse.