This is an awesome article by the Allen Tate Marketing team. The main question I have been getting lately from buyers and homeowners is, “Will this effect my home value and/or selling my home in the future?” The housing crash of 2008 is in the back of people’s minds and this article explains why this time is NOT like “last time”.
As the stock market continues to be volatile amid the COVID-19 Pandemic, many worry about any fallout the housing market might experience.
Even though the housing market crash of ‘08 and ‘09 is somewhat of a distant memory, there’s still fear we could experience something like it again.
Will the Coronavirus impact the housing market like the recession did? Here’s 5 facts that say it won’t.
FACT #1: HOME PRICES ARE APPRECIATING AT A NORMAL RATE
With the low housing inventory we’ve seen over the last few years you’d think home appreciation would be at an all time high, but when compared to how it was before the housing crisis, home prices are appreciating at a much lower rate.
The six years prior to the housing bubble, the market saw an average appreciation of 9.3%, with the two highest years right before the crash. In contrast, the last six years has seen an average price appreciation of just 5.16%.
FACT #2 HOMES ARE NOT TOO EXPENSIVE TO BUY THANKS TO AVERAGE APPRECIATION RATES
Building on point number 1, we can see that home prices are appreciating at a normal rate, meaning they’re not too expensive to buy. Prior to 2008, homes were very expensive to buy, and this was largely due to rapid price appreciation. Additionally, mortgage rates were much higher than they are today, making affordable housing hard to come by. Today’s ultra low interest rates coupled with normal price appreciation paint a much better picture for homeowners.
FACT #3: MORTGAGE STANDARDS ARE MUCH TIGHTER THAN THEY WERE PRIOR TO THE HOUSING BUBBLE
While it’s not impossible to get a mortgage today, it is harder than it was prior to the housing crash. To make sure we don’t repeat the past, lenders have implemented a number of precautions to make sure today’s borrowers are in a good position financially. Although we may see different loan programs become unavailable over time, smart lenders will have other programs in place for buyers. Choosing your lender is crucial, so be sure they have a vast knowledge of programs to offer if you are purchasing.
FACT #4 HOUSING INVENTORY IS VERY LOW
A balanced housing market has 6 months of supply. Before 2008, we had an abundance of supply, which led to price depreciation. Today, most markets are seeing an average of fewer than 3 months of supply, meaning we’re in a low inventory market.
FACT #5 HOMEOWNERS HAVE NOT OVEREXTENDED THEMSELVES FINANCIALLY
Would it surprise you to know that over 50% of homes in the country have greater than 50% equity? Prior to the housing crash, American’s financial picture was fairly grim— many, many homeowners had tapped into their home’s equity as soon as it was available, which only added to the problem when combined with abundant housing inventory and accelerating home prices.
MARCH 30, 2020 – BY MARKETING@ALLENTATE.COM
The housing market is hyperlocal and in High Point, before COVID-19, we had limited listings and lots of buyers = a seller’s market. When things get back to “normal” this should still be the case. The Guilford County restrictions on Real Estate Agents showing homes (which I think is ridiculous) will be lifted and buyers will be coming back to purchase.
So, contact your trusted Real Estate Agent now. Whether a buyer or seller, be prepared to take the next step when the new normal comes around!