How can I say such a thing in the heat of a red-hot housing market? Let me number them:
Prices aren’t soaring as high: The 2005-2007 market saw consecutive years of double-digit price increases in real estate, topping off at nearly 13%. This time around? 7% average increases with a high of just 9%.
We have too few houses selling, not too many: Back then, we had an average of nine months of inventory on the shelves (homes for sale). Anything over six months is a SURPLUS. Today? We have two months’ worth of stock, well below the dangers of a surplus.
Mortgage qualification standards have changed – a lot! Any need to cover this in much detail? Back then we took a whole bunch of good renters and turned them into bad owners. Not today. The default risk rate in 2020 was HALF of what it was in 2008.
We haven’t built enough homes. We are now in year 12 of not building enough homes to keep up with population needs and housing destruction. Back then? 14 straight years of building MORE than needed! Ouch.
Equity is not tapped out. Homeowners ran up their “house credit card” in 2005-2007 at over DOUBLE the rate they do now. Far fewer people are at max equity, making it easier to sell for a profit rather than cut and run in a Short Sale.
Houses haven’t become too expensive. Wages have kept up with real estate pricing while rents have actually moved faster. The average person today needs 15% of their income to hold a mortgage. That number was 25% in 2007!
Houses are still best purchased as HOMES and not STOCKS. Once you can settle on that truth you will learn not to read the headlines with quite the degree of ‘panic’. And if you still get antsy, these six points should give you great comfort.
Far more comfort than watching this year’s Celtics will do, that’s for sure.
"I will be out of the office all day Tuesday programming a new universal remote control for my wife’s TV. (And yes, I do have a second one in case the first one breaks when it hits the wall.) My hope is to be back in the office Wednesday. Please pray for me.
My assistant will screen your email for typo’s and grammatical errors and call her high school English teacher to report you if she finds even the slightest mistake. She’s good like that."
Orignally posted May 21, 2019
Posted by Shamrock Home Loans on