Here are three reasons why we don’t expect the market to crash.
Is the market crashing? Many consumers, especially those who experienced the 2008 and 2009 crash, are concerned about the current state of the economy. Today, I’ll share three key reasons why the current real estate situation is significantly different from what it was a decade or more ago.
1. Inventory. In the past, there was a surplus of homes on the market, with millions of properties sitting vacant for extended periods. However, today, we’re facing a significant deficit in inventory. We’ve had 14 consecutive years of new construction homes failing to meet the nation’s demand, which means we’re not likely to see a market crash because there’s a shortage of available homes.
“All these factors point to a situation where a market crash is unlikely.”
2. Lending regulations. Unlike the late 1990s and early 2000s, lending regulations have become much stricter. Foreclosures are significantly lower than historical levels because banks are no longer willing to take risks on lending money to unqualified borrowers.
3. Equity. Unlike the late 2000s, when many homeowners owed more than their homes were worth due to poor lending practices, today, over half of American homeowners have more than 50% equity in their homes. This means they have the option to sell their homes if times get tough, which can help balance the market due to the lack of inventory.
All these factors point to a situation where a market crash is unlikely. If you want to discuss this further or have more conversations about real estate, please call or email us. We’re always available to connect and provide more insights on this topic.