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5 Things to Know About Today's Market in LKN & CLT
August 20, 2021 at 10:57am | Elevate Real Estate Raving Fan Club
As we start to explore the market and strategize with our buyer clients,
we get asked all the time these types of questions and concerns:
Are we in a bubble?
Will the housing market crash?
Will home values come tumbling back down again?
Unfortunately, we don't have a crystal ball that will tell us the exact timelines in the market.
But, fortunately, we can follow and trust what we know to be true about the larger market to be true -
that the concerns above are largely unfounded. Most economists agree that today’s market is
nothing like the market we saw in 2008 — and a crash is very unlikely.
Here are just a few of the conditions that economists say will ward off another crash:
1. Supply is limited. The number of homes listed are near their lowest points in the history of data collection, and demand is still going strong. This keeps
prices up, as most buyers need to up their bids to compete for the limited number of homes for sale.
2. Mortgage underwriting is stricter. One of the problems in the 2008 crash was that lending and underwriting standards weren’t as strict as they could have
or should have been. As a result, there were loan approvals that shouldn’t have happened, which lead to a number of home being purchased by buyers who couldn't afford their houses, and that led to a wave of foreclosures, which sent home values
3. Homeowners have lots of equity. Another thing that should hold off foreclosures in the foreseeable future is the record amount of home equity owners are
sitting on now. This helps to prevent homeowners from going underwater on their mortgage (i.e., owing more than it’s worth) if home values drop.
4. Demand will remain high. The Federal Reserve has committed to keeping interest rates low at least through next year, so mortgage rates are expected to
remain steady for the foreseeable future. This helps keep buyers in the game despite rising prices. Demographic changes — like out of state buyers moving South, millennials starting families, and rental rates staying high — will likely also keep
demand to buy a home strong.
5. Homebuilding materials cost more. New builds are starting to creep higher, too, due to rising material prices. Material shortages are also preventing builders
from increasing supply quickly.
From what we can tell in our market - conditions aren’t there for another crash.
However, in the unlikely event the market does take a tumble, most homeowners have a great
safety net of equity to protect them. Reach out to an Elevate Real Estate agent today if you have
more questions about today’s market or your specific situation, we're here to help!