Lots of people have been asking us if a crash is on the horizon.
Many people are afraid that we’re heading towards another housing crash like 2007. Today we’ll answer the question, “Are we in a housing bubble?” This market may feel similar to 2007 due to the high prices, but here are a few major factors that make this situation quite different:
1. Real estate bubbles are very rare. The 2007 housing crisis happened due to a series of events and decisions that would not occur today, like the relaxation of lending standards and the popularity of adjustable-rate mortgages.
2. Safer mortgages. Homeowners took out risky mortgages and had almost no equity. Once the market fell, many loans were worth more than the houses themselves. Today, homeowners’ equity is at an all-time high.
3. New home construction is behind and expensive. It will likely take years before supply and demand balance out again.
4.Buyers are paying with cash and are extremely qualified. The 2007 market was filled with unqualified buyers, and today’s lending standards are much stricter.
If you have any questions, reach out to us by phone or email. We look forward to hearing from you.
