Why Experts Believe We Are NOT Headed for a Housing Crash

If you’re on the fence about buying a house and think a looming crash in the housing market will bring down prices, many experts believe that not only will there NOT be a crash, but home prices will continue to rise. Are their assessments correct? Here’s some of their reasons to consider:

It’s Harder to Qualify for a Mortgage

Lending requirements are much more stringent than they were leading up to the market crash in 2008-2009 (the higher the number, the easier it is to get a mortgage):

Fewer Homes Available for Sale Supports Pricing

It’s the law of supply and demand. People will pay more for an item that’s in demand and is scarce.

Homeowner’s Have a lot of Equity

Back in the lead up to the housing crash, many homeowners were borrowing against the equity in their homes to finance new cars, boats, and vacations. So, when prices started to fall, as inventory rose too high, many of those homeowners found themselves underwater.

But today, homeowners are a lot more cautious. Even though prices have skyrocketed in the past few years, homeowners aren’t tapping into their equity the way they did back then.

Black Knight reports that tappable equity (the amount of equity available for homeowners to access before hitting a maximum 80% loan-to-value ratio, or LTV) has actually reached an all-time high: 1

That means, as a whole, homeowners have more equity available than ever before. And that’s great. Homeowners are in a much stronger position today than in the early 2000s. That same report from Black Knight goes on to explain:

“Only 1.1% of mortgage holders (582K) ended the year underwater, down from 1.5% (807K) at this time last year.”

And since homeowners are on more solid footing today, they’ll have options to avoid foreclosure. That limits the number of distressed properties coming onto the market. And without a flood of inventory, prices won’t come tumbling down. 2

While no one has a crystal ball to predict the future, most experts believing that home prices will continue to rise. Is now the right time to start on your path to home ownership? There can be a lot of factors to consider. Contact me and let’s talk about whether “now” makes sense for you. 📲🤙📧

  1. Keeping Current Matters ↩︎
  2. Keeping Current Matters ↩︎

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