Hot Market = Bubble?

You’ve likely seen the real estate market boom in your respective area, but what does that mean for the future? This has been great for homeowners as they’ve seen a substantial increase in equity in their homes, but what does this mean for aspiring homeowners? Many who lived through the recession in 2008 are hesitant about the overall state of this market, as they should be. Going through something like that is devastating, which is why the government, lending restrictions, and more won’t allow that to happen again.

Leading economists have dug deep to see if we’re heading down the same road and here’s what they found:

LOW INVENTORY:

Homes for sale in early 2021, 1.03 million.

Homes for sale in July 2007, 4 million.

Supply isn’t outweighing demand like in 2008, this is still a strong seller’s market!

HIGHER DOWN PAYMENTS:

Avg. down payment, 15.9%

Benchmark, 20%

National homeowner equity in 2020, $1.5 trillion.

With homeowners increasing their down payments they are starting out with more equity.

FIXED-RATE MORTGAGES:

Conventional mortgages increased during pandemic…

Pre-pandemic, 49.7%

Pandemic, 53%

With the historically low-interest rates, buyers are locking in these rates for the duration of their mortgages.

TIGHTER LENDING RESTRICTIONS:

Foreclosure filings in March 2008, 234,685.

Foreclosure filings in February 2020, 48,004. (this was a 15-year low)

Foreclosure filings in March 2021, 11,880.

With mortgage qualifications becoming more strict it has kept buyers within their means, which decreases the risk of foreclosures.

Don’t let this market scare you! With the rise in home prices, the historically low-interest rates are still keeping aspiring homebuyers in the market.

Questions?

208.596.9790

rewithjake@gmail.com

Sources:

• National Association of REALTORS®
• REALTOR® Magazine
• CoreLogic
• ATTOM Data Solutions