Housing Crash 2.0?

Housing Crash 2.0?

Earlier in the year 2022, approximately 45% of the home sellers believed that the housing market was on it way to a crash. Google searches for the phrase “housing bubble” spiked and doomsday fears increased as the market seemed overheated. While these fears have some legitimacy, it is not a housing crash 2.0! The circumstances that surround this housing adjustment are different that what we saw around 2008. The US is still facing a low housing inventory situation and low rental vacancy rates. This is due to many years of underproduction. Below are facts that may help you understand how this housing market shift is different than the one we saw during the Great Recession.

  1. Mortgages are structured differently today. Lenders are much more strict about whom they will lend to. Buyers must have higher credit scores and prove their ability to pay back the loan.
  2. Housing inventories throughout the US remain low. According to Freddie Mac’s estimates, The US is short approximately 3 million homes.
  3. There is still a buyer demand for homes. Homeownership is a top goal for millennials and others.
  4. Investing in real estate hedges against inflation. With a fixed rate mortgage, a buyer can guarantee their payments and closely estimate their monthly expenses. Historically, homeowners who buy and hold on to their home for at least 10 years have a 93% chance of selling their home for more than what they paid.
  5. Finally, a housing market correction is not the same as a market crash. Prices are steadily decreasing as the interest rates are currently increasing. Purchase prices and interest rates must make financial sense and once they do, we will see an uptick in sales again.

Real Estate is still a good investment and can provide security to you and your family. In today’s market, go over the numbers carefully and just make sure that they work for you. As you navigate this interesting time in history, choose Pinyon Properties. We are your real estate professionals and are ready to assist.

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