We hope you and your loved ones continue to stay safe and healthy. COVID-19 continues to be the topic of conversation and the dominating force in our lives.
With all the volatility in the stock market and uncertainty about the length of time this may last, a lot of folks are rightfully concerned about another market crash like we had in 2008-2011, otherwise known as the Great Recession. Ali Wold, Director of Economic Research for the real estate consulting firm Meyers Research, addressed this point in a recent interview:
There are quite a few reasons indicating this real estate market is nothing like 2008. Here are 5 dramatic differences:
1. In the last 30 days, more homes have offers accepted on them than are coming available for purchase in our UT market and most major metropolitan areas.
2. Mortgage standards are nothing like they were back then. Have you seen the movie “The Big Short”? Well, you can’t fog a mirror and get a loan anymore. Standards for underwriting are tough. Getting a loan isn’t hard to do, but you actually have to qualify for that loan. No more stated income loans, or the proverbial 80/20 combo loans.
3. We don’t have a surplus of homes on the market. As mentioned we have a surplus of buyers. We actually have a shortage of homes available.
- 3983 new homes came on the market
- 4708 homes went into under contract status
- 4711 closed
4. Houses became too expensive in the lead up to the Great Recession. Affordability was a real issue, though didn’t factor into getting a loan. The affordability index, which is the percentage of an average person’s income it takes to buy an averaged priced home is FAR lower than it was from 2005-2007. The major player in affordability has been historically low-interest rates.
5. People are equity rich, not tapped out. From 2005-2008 people were using their homes like piggy banks and banks were more than happy to give out nearly free home equity loans for more than their homes real value. The result of this was people using equity from their homes to finance their lives wants, weddings, vacations, cards, credit card consolidation, etc…That put their homes are a risk in the event they were unable to afford them as they had no equity to sell. Well, banking institutions have put a lot of restrictions in place to prevent people from over-encumbering their homes.
We will continue to keep the real estate industry operating during these trying times. Please don’t hesitate to call us and ask us about our safe seller and virtual buyer programs our clients are utilizing to stay safe during these uncertain times.