5 Reasons Why We Will Not See a Repeat of 2008 Crash
Our real estate market has seen a dramatic shift in the last few months. One thing that hasn’t changed, at least in a negative way, is the value of our homes and other real estate. We are not seeing real estate values dropping as they did at that time. In fact, we are seeing increasing values even as inventory of available properties increases.
The National Association of Realtors (NAR) chief economist, Lawrence Yun, recently explained why our market is so different from 2008: (excerpted from Realtor Magazine, December 15, 2022)
- The labor market remains strong: In fact you may be hearing that there is upwards of 2 jobs for every one applicant.
- Less risky loans: Back in 2008, we joked that many lenders used the “two part mirror test” for qualifying borrowers. Hold a mirror up to their face. If you see a reflection, they pass part one. Then, if you continue to hold the mirror up to their face and the mirror eventually fogs up, they pass the second part! Well, it really wasn’t that bad, but it was close. Too many borrowers received high loan-to-value loans they could not afford, and they ultimately defaulted on them.
- Underbuilding and Inventory Shortages: New construction today is 4.6 million verses 7.65 million in 2008. We are seeing “a massive housing shortage” according to NAR
- Delinquency Lows: In 2008, 10% of all loans were delinquent. Currently, that number is 3.6%, which is a modern era low.
- Ultra-Low Foreclosure Rates: In 2008, the foreclosure rate reached 4.6%. Currently, the number of homes in foreclosure is 0.6% also a modern era low.
Our sense is that we are approaching a very healthy balanced real estate market. This is a great time to make your move, either buying, selling, moving up, or moving down.
As always, we are always here to support you in making the best real estate decision for you and your family. You can reach us at 949-500-6365, Frank@FrankDiLauro.com, or our website, www.FrankDiLauro.com
