The Team Hinton Real Estate Group blog is a place for all the latest news and updates about the Real Estate market will appear. Learn all about the latest and greatest tips and tricks to buying a home or selling a home. Also, get the latest updates about Team Hinton and our ever growing team of real estate agents in Ypsilanti, Michigan.
Homeowners are in luck! With the recent events of COVID-19, there are more options for current homeowners to prevent foreclosure. Even though there was talk of a repeat of what happened in the 2008 housing crash, with mortgage forbearance, and increased equity homeowners can change all that.
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With all of the unanswered questions caused by COVID-19 and the economic slowdown we’re experiencing across the country today, many are asking if the housing market is in trouble. For those who remember 2008, it’s logical to ask that question.
Many of us experienced financial hardships, lost homes, and were out of work during the Great Recession – the recession that started with a housing and mortgage crisis. Today, we face a very different challenge: an external health crisis that has caused a pause in much of the economy and a major shutdown of many parts of the country.
Let’s look at five things we know about today’s housing market that were different in 2008.
When we look at appreciation in the visual below, there’s a big difference between the 6 years prior to the housing crash and the most recent 6-year period of time. Leading up to the crash, we had much higher appreciation in this country than we see today. In fact, the highest level of appreciation most recently is below the lowest level we saw leading up to the crash. Prices have been rising lately, but not at the rate they were climbing back when we had runaway appreciation.
The Mortgage Credit Availability Index is a monthly measure by the Mortgage Bankers Association that gauges the level of difficulty to secure a loan. The higher the index, the easier it is to get a loan; the lower the index, the harder. Today we’re nowhere near the levels seen before the housing crash when it was very easy to get approved for a mortgage. After the crash, however, lending standards tightened and have remained that way leading up to today.
One of the causes of the housing crash in 2008 was an oversupply of homes for sale. Today, as shown in the next image, we see a much different picture. We don’t have enough homes on the market for the number of people who want to buy them. Across the country, we have less than 6 months of inventory, an undersupply of homes available for interested buyers.
The chart below shows the difference in how people are accessing the equity in their homes today as compared to 2008. In 2008, consumers were harvesting equity from their homes (through cash-out refinances) and using it to finance their lifestyles. Today, consumers are treating the equity in their homes much more cautiously.
Today, 53.8% of homes across the country have at least 50% equity. In 2008, homeowners walked away when they owed more than what their homes were worth. With the equity homeowners have now, they’re much less likely to walk away from their homes.
The COVID-19 crisis is causing different challenges across the country than the ones we faced in 2008. Back then, we had a housing crisis; today, we face a health crisis. What we know now is that housing is in a much stronger position today than it was in 2008. It is no longer the center of the economic slowdown. Rather, it could be just what helps pull us out of the downturn.
Get ready for another strong year in the 2018 housing market! U.S. home values and sales volume will continue to rise in 2018. Find out how you can maximize your Real Estate selling or buying this coming year.
Read MoreAmericans continue to believe that homeownership is important in achieving the American Dream. A recent survey by NeighborWorks America reported that:
“Owning a home remains a core element of the American Dream.”
When asked “How important a part of the American dream is owning a home?”
Homeownership and Financial Stability
The survey also revealed that 81% of Americans believe that owning a home leads to a family being more financially stable. This feeling was reiterated by Zillow Senior Economist Aaron Terrazas who, in a recent press release, explained:
“After about a two-year slowdown, rent growth is starting to pick back up across the nation…Looking into 2018, rent is expected to continue gaining.
More widespread rent growth could mean home buying demands stay high, as renters who can afford it move away from the unpredictability of rising rents toward the relative stability of a monthly mortgage payment instead.” (emphasis added)
Owning a home always has been, and always will be, a crucial part of attaining the American Dream.
“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”
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