Spring of 2020 could have been a detriment to the real estate industry. Instead, the market saw some of its most significant growth and appreciation in years. Despite this, many homebuyers have become fearful that another housing crisis is on the horizon. The fast rise in prices and overall market activity resembled the climate that led to the housing bubble and crisis in 2008.
However, some statistics show that a crisis is not impending. The number of houses on the market is significantly lower than it was in 2008. Not even the abundance of newly-built houses is balancing the inventory shortage. During the housing bubble, homes became too expensive for many to afford. Today, wages have increased and mortgage rates decreased, leading to better affordability of housing. Finally, homeowners have learned not to tap into their equity like in the past, pointing to overall better financial health and stability.
With the unexpected and robust growth of the housing market in the past year, many are cautious. Thankfully, some signs prove otherwise. For instance, during the housing bubble of 2008, it was effortless to get a mortgage. Lenders were not afraid to take risks and tolerate lower credit scores. Today, the accepted risk is the lowest it’s been in decades, calling for higher credit scores to qualify for a loan.
Although housing prices are on the rise, they are not soaring out of control as they were back then. While there was an extreme surplus of homes on the market, today we see the opposite: there is a shortage. Houses stay on the market for an exceedingly shorter time, leading to sustained price appreciation.
These facts point to a healthy and stable housing market, making now the perfect time to buy or sell a home!