There is a lot of buzz among the general public as to if and when there will be a real estate market crash like the one in 2008. The fact is, there won't be. The real estate market is nothing like it was back then.
Current State of the Real Estate Market
The real estate market is still sizzling hot. Interest rates remain at historic lows. According to an article on Bankrate.com, written by Jeff Ostrowski, "Mortgage rates plumbed to new depths in January 2021, setting all-time lows south of 3 percent." He continues to say that interest rates have remained around the three percent mark, or a little higher, throughout the year thus far. The inventory of homes available are historically low as well. According to an article on Realtor.com, written by Danielle Hale, "The national inventory of active listings declined by 25.8% over last year, while the total inventory of unsold homes, including pending listings, declined by 13.8%. The inventory of active listings is still down 52.8% compared to 2019."
There is a record number of buyers on the market to buy homes. Millennials and first-time homebuyers are coming of age and are now more financially qualified to purchase homes. Real estate investors are taking advantage of the low interest rates and are scooping up investment properties. Empty nesters and members of the baby boomer generation are downsizing and purchasing their forever homes. Demand is high and supply is low. There is no indication that this will change anytime soon. We have a few years, at least, before the supply of inventory catches up with the demand.
How it's Different From the Last Crash
The crash of 2008 was caused by real estate. Lenders were approving people for mortgage loans that should never have been approved. Some mortgage lending companies were charged with fraud and poor business practices as well. There weren't near as many buyers and there wasn't a lack of inventory either. In today's market, lenders are quite a lot more strict with their lending guidelines and practices. Even though home values and sales prices are rising, appraisers are keeping a tighter reign on appraisals. This time, the real estate market is actually leading the way and keeping the economy out of a crash.
The Real Estate Market Will Remain Solid Moving Forward
Real estate industry professionals are predicting that the real estate market will remain solid over the next few years. While no one has a crystal ball, all signs lead to a solid market in the future. Many sellers, who have been afraid to make the move to sell their homes because of the coronavirus and other factors, are warming up and are slowly listing their homes. Builders cannot keep up with developing new communities and building new homes. In an article on Reuters.com, written by Reuters and Lucia Mutikani, housing starts increased 19.4% in March of 2021. This indicates a 15-year high. It will be quite a few years before the gap narrows between the supply of homes and the demand of buyers. More people have equity in their homes which should lead to fewer foreclosures in the near future. Home values are continuing to rise in the fall of 2021. Just like the fall and winter markets of 2020/2021, the fall and winter markets of 2021/2022 are expected to continue to remain strong with some seasonality expected as usual.
The real estate market is experiencing and celebrating a lot of success right now. There are no signs of a crash in the near future.