Will the Real Estate Market Crash Soon?

Mortgage with Manny Gomes

Are home prices going to crash? A lot of people have this concern, and it’s easy to see why. Prices have been rising for so long that people assume they will have to crash eventually. However, this isn’t necessarily the case, and today I want to talk about all the reasons why that is. I started my real estate career during the last big crash in 2008, and what’s happening in our market right now is nothing like what was happening back then. The biggest issue in 2008 was that banks were approving people for mortgages without vetting their finances at all. This created an influx of artificial buyer demand that drove home prices up like crazy. Things got so bad that it was sometimes cheaper to rent a home down the street than to pay your mortgage payments. We had a huge amount of people approved for a mortgage who couldn’t afford it. When the economy took a downturn, it caused a chain reaction in the housing market that led to a giant wave of foreclosures. This greatly devalued homes everywhere. “Our current market is nothing like the one from 2008.” Does that sound like today? It shouldn’t. Our economy is strained, but we’re mostly seeing this result in inflation, which is good for homeowners. If the costs of assets increase, that means the value of your home will increase too. On top of this, we have low interest rates creating organic buyer demand that doesn’t look like it’s going anywhere. Finally, the government added a whole new slate of regulations on banks following 2008, so lenders can’t approve people for bunk mortgages like they did before. In reality, our hot market is driven by two big factors: low supply and high demand. As the millennial generation has grown up, their appetite for homes has hit the market hard. They are well-funded buyers, and their demand doesn’t seem to be going anywhere. Because of all these factors, it doesn’t make sense for home prices to crash or even decline anytime soon. That being said, we probably won’t see the same crazy rate of growth of the last few years. Things will likely level out to a healthy and stable market. If you are thinking of buying a home, take advantage while you can. Interest rates are rising, so if you want to make a move or have any questions, please call or email me. I am always willing to help.