These are the reasons why we don’t expect the market to crash.
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Today, we want to discuss the current state of the real estate market and address concerns about a possible crash. Many people are worried, given the rising interest rates and media coverage, and they are comparing it to the 2008 market crash. However, today’s market is very different from the one in 2008.
We currently have limited inventory; there simply aren't enough homes available to meet the population growth we've experienced in the past few decades. This scarcity is a key distinction for first-time homebuyers. In 2008, there was an excess of homes for sale, and obtaining a loan was relatively easy. Anyone could secure a loan without much scrutiny. This led to a situation where many people couldn't repay their loans, resulting in balloon payments and significant payment increases.
"There aren't enough homes available to meet the population growth we’ve experienced in the past decades."
Today, the lending environment is very different. Everyone has to qualify for their mortgages, and the type of financing available is more stringent. However, the primary factor propping up the real estate market currently is the lack of available homes, and there are two main reasons for this.
Firstly, homeowners are hesitant to move because they have low interest rates and don't want to switch to higher rates in the current economic climate. Secondly, hedge funds are acquiring a significant number of homes, and it's projected that they may own 40% of the real estate market by 2030. This trend artificially reduces the inventory available for buyers.
Considering these factors, it's unlikely that the real estate market will crash unless there's a substantial increase in inventory, which doesn't seem probable given the current market conditions.
If you have any further questions or need more information on other topics, feel free to contact us via phone, text, or email. We are always happy to hear from you.
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