5 Reasons…We Do Not Expect to See A Housing Crash Any Time Soon…

  • Megan Douglas
  • 08/25/20
 
Are you worried about the housing market? Scared to invest in real estate during a recession and a pandemic? We want to calm those fears.
 
Reason #1 – Record Low Inventory
 
Across the country, there are fewer homes available for buyers than there were last year. Even including New Construction homes, there are still not enough properties to keep up with demand.
 
 
Reason #2 – Rising Homeownership Rates
 
Since late 2016, the homeownership rate has been recovering and shows no signs of fatigue. As we approach ten years of consistent real estate appreciation, we are seeing renewed confidence in real estate as more renters become buyers.
 
 
Reason #3 – Demographics are Changing
 
One of the biggest predictors of homeownership is starting a family. Though they delayed settling down, millennials are now ready to buy and there are more of them entering the market than homes available.
 
 
Reason #4 – Home Prices Aided by Low Interest Rates
 
The gray lines in the graph are economic recessions in the United States. There’s a slight blip in 2001 and a BIG one for the Great Recession in 2008 (which was caused by real estate and bad lending practices). However, recessions almost always INCREASE home prices because interest rates are lowered to stimulate the economy.
 
 
Reason #5 – Homeowners are Sitting on Record amounts of Home Equity!
 
A housing crash is most devastating to owners who can’t afford to sell their homes. Short sales and foreclosures happen when there isn’t enough equity in the home to sell it at market price and pay off all the debts on the property. The average home with a mortgage could sell for $177,000 below market value and still pay off the bank.
 
 
Bonus Fact! – Homes are Incredibly Affordable Today
 
Although home prices have increased, lower interest rates are making homes more affordable today than they have been in the last 7 years.
 

Bottom Line

If you’ve been curious about investing in real estate but were worried about doing so during a pandemic…now may actually be the perfect time to explore your options! Reach out anytime to check out your possibilities.

 

 

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