Real estate headlines can be confusing. So is the housing market going to crash or not?
It’s More Difficult to Get a Loan Today
In the lead-up to the 2008 housing debacle, it was much easier to get a home loan. Banks had very different lending standards back then. This meant that just about anyone could qualify for a loan or refinance. Lenders took on much greater risk in the past, which led to mass defaults, foreclosures, and falling prices. However, things are not the same today. Potential buyers face much higher standards from mortgage companies. The lower the number, the harder it is to get approved. The higher the number, the easier it is to get a mortgage.
Unemployment Recovered Quicker This Time
The global health crisis of the last couple years caused unemployment to rise. However, at this point in time, the unemployment rate has already recovered back to pre-pandemic levels. Not so with the Great Recession, when a large number of workers stayed unemployed for a much longer time afterward. Quick job recovery helps the housing market in a big way. Since so many people are currently employed, there’s less risk of homeowners facing hardship and defaulting on their loans. Thus, today’s market has a stronger footing and reduces the chance of foreclosures occurring.
Inventory Remains Low Today
During the housing crisis of 2008, there were too many homes for sale. Many of these were short sales and foreclosures. This excess of inventory caused prices to fall dramatically. Currently, there remains a shortage of inventory. According to the NAR and the Fed, unsold inventory sits at just a 2.6-months’ supply. Simply put, there just isn’t enough inventory for home prices to come crashing down.
Equity Levels Are At Near Historic Highs
The low number of houses for sale helped keep upward pressure on home prices during the global health crisis. Consequently, current homeowners have amassed near-record amounts of equity. CoreLogic’s principal economist Molly Boesel says, “Most homeowners are well positioned to weather a shallow recession.” She continues, “More than a decade of home price increases has given homeowners record amounts of equity, which protects them from foreclosure should they fall behind on their mortgage payments.”In conclusion, in the current real estate market, there are many indicators that no crash will occur. If you are thinking of selling, now is a great time thanks to the lack of inventory. To begin your home selling journey, connect with your local Surterre agent today at SurterreProperties.com.