With so much going on in the world, and here at home in the country – in our states, counties and towns – it is hard to decide what to be worried about and what to do with your time, your money and your CHILDREN! LOL, that last one is an attempt to keep some humor in our lives.
It is easy to feel like we are approaching disaster. You might feel that a disaster like 2008 and the Great Recession are knocking on our front doors.
There are several things going on today that were not going on in the years leading up to the 2008 recession. I’m sharing these points with you today in the hopes that you’ll feel better after you finish reading what I’ve written. These points come from Keeping Current Matters, an information repository for Realtors like me, Carl and Gerry.
- Mortgage standards are higher – in 2008, it was very easy to be approved for a loan. Not so easy today
- Prices are not soaring like they were then. In fact, in Basking Ridge, though rates are low, inventory is low and contract sales are up – prices were down a bit from 2018.
- There is shortage of inventory; unlike 2007 when there were too many homes on the market because sellers were “upside down” on their loans.
- In 2008, houses were expensive to buy. Affordability has three components: purchase price of the house, income of the buyer, interest rates. In 2006, 2007 and 2008, prices were high, wages were low, interest rates were high. Today, prices are down, wages are up and interest rates are low.
- The average homeowner today has significantly more equity in their home than they did 14 years ago. Back then, people were cashing out their equity. Or finding themselves unable to afford their payments – this caused an unprecedented number of distressed sales – which subsequently brought values down.
If you are concerned about the direction of the real estate market – review these facts. Hopefully they will ease your mind. Questions? Reach out to anyone on The Blanchard Team – we can walk your through it.