A Lack of Supply.
Let’s break down the differences between now and the 2008 housing crash
What in the world is up with this Seller’s market?! Many are asking this question. If you’re a Buyer, you might be wondering what to do to get your offer accepted. Do I need to offer to have my firstborn child named after the Seller? If you’re a Seller, where is the peak, and when should I plan to list? What we do know is that this is nothing like 2008! It’s the exact opposite. This time, the housing supply is at a historic low. Demand is real and rightly motivated. Even if there were to be a drop in prices, homeowners have enough equity to weather a dip in home values. Let’s break down the differences between now and the 2008 housing crash:
Our population has almost doubled in size since the 1950’s yet housing has not kept pace. Millennials: The largest generation in the country has come of age to marry and have children, two primary drivers for homeownership. Our elderly are living longer. The ‘silver tsunami’ will be here for quite some time.
Health crisis: 2020 challenged every household to redefine the meaning of “home” and re-evaluate whether their current home meets that new definition.
Record low mortgage interest rates:
The desire to own, coupled with historically low rates, makes purchasing a home today a strong, sound financial decision.
Though it has gradually become easier to get a mortgage since 2011, we are nowhere near some of the irresponsible lending practices from 2004-2007. Back then, you could practically get a mortgage if you had a pulse. Not so now.
Households have plenty of equity:
Again, during the housing boom, it wasn’t just purchasers who got caught up in a frenzy. Existing homeowners started using their homes like ATMs. There was a wave of cash-out refinances, which enabled homeowners to leverage the equity in their homes. That left many homeowners with little or no equity in their homes at a critical time. As prices began to drop, some homeowners found themselves in a negative equity situation where the mortgage was higher than the value of their home. Many defaulted on their payments, which led to an avalanche of foreclosures.
If you’re looking for a home to live in for more than a few years, you will likely ride out any pullbacks in pricing. For those planning to “wait out this seller’s market,” you may find yourself getting priced out of the market entirely, OR instead of getting the 4/2 you want, only be able to afford a 3/2. Also, the US currently has the highest number of licensed realtors in history, with many of them un-trained to advise you effectively. We urge you to practice sound financial planning and hire a full-time, professional real estate agent that knows the market and cares about your results. We’d love the opportunity to work with you and are here to help!
-Barbara Schluraff ~ Broker/Owner