Here’s how our present market is different from the one we had in 2008.
Are we in a real estate bubble? Clients have been asking me that quite a bit lately; they’re having flashbacks to 2008. No one can predict the future with 100% accuracy, but I’ll share what’s happening currently and what my experience tells me is likely to happen in the near future.
Many people are comparing the rapid price increases of 2008 to what’s happening today; home prices have risen 21% in our market compared to this time last year. In some markets, it’s even higher. That’s a dramatic escalation, but there are differences between our market in 2008 and now.
First, lending practices have changed; in 2008, people could get a loan just by stating their income. Plenty of people bought homes they couldn’t afford. Today’s market is different. Lenders have stricter guidelines and all incomes are verified.
Back in 2008, a bunch of speculation was happening; people were overpaying for homes with adjustable mortgage rates. Then once the bottom fell out, people were stuck with decreased home values but much higher mortgage payments. That led to a slew of foreclosures, which led to further price declines.
Thirdly, we’ve been dealing with the pandemic, and people were stuck in their homes for a long time. Now there’s tons of pent-up demand, so we have a crowd of buyers out in the market looking for homes. We also have low interest rates, so there’s a very high demand but low supply.
The bottom line is that the experts see the market we’re in continuing for another 12 to 14 months before anything big changes. Our market these days is very different from that of 2008, so there’s no need to worry about a bubble.
If you have any other questions regarding our market or real estate in general, feel free to give me a call or shoot me an email. I would love to help you.