Not really guys – I am spilling my take on why this recession is different *Spoiler Alert: It isn’t the same ole thing you have been hearing from other agents.
All the buzz in the media is giving homeowners and prospective homebuyers serious concern and for good reason. 2008 was terrible for homeowners and we all have a fear of history repeating itself. Keep in mind friend, most reporters are not real estate professionals! If you have questions, ask a real estate agent that you know and trust.
Here is what you have already heard from just about EVERY real estate professional out there:
- We still have low inventory.
- The market has shifted slightly making this a more neutral market.
- This is not 2008.
- Irresponsible lending lead to the 2008 crash. Back then getting a home loan was almost as easy as ordering Door Dash is today!
- Sellers have plenty of equity in their homes. If they need to get out of a home quickly to avoid foreclosure they can
- in 2008 there were 12.1 million adjustable-rate mortgages (ARMs) on the books. Today, there are closer to just 2.5 million. Those ARM loans make a homeowner’s rate fluctuate and can often lead to them no longer being able to afford their payments
Now here is what you probably haven’t heard (and just my take)
When a record number of homes were foreclosed on in 2008, Fannie Mae and Freddie Mac sold those homes at a deeply discounted rate. This created a mess for homeowners because these home counted as recent sold comps. Appraisers had to use these comps along with other recent solds to assess home values. Because these discounted homes had to be used along with any other sold properties in neighborhoods, it caused the overall value of homes to drop drastically. This of course let to more foreclosures because those that needed to cash out to avoid foreclosure couldn’t due to the fact that now on paper, their home was worth less than they owed.
I confident that it’s different now
I started my real estate career with Fannie & Freddie as clients, and I can tell you that they have shifted the way they sell foreclosed homes now. They no longer deeply discount home prices. In fact, the goal is to have an owner occupant in the homes they list. They are rehabbing most homes to get them to move in ready status and make it easier for a buyer to move right in. These foreclosed homes, turn key or not, are now being sold AT MARKET VALUE. This means that even if we saw another round of foreclosures, It shouldn’t effect your home’s value like it did 14 years ag
Now get back to enjoying your home with the peace of mind that your largest investment is secure!
And if you are thinking about Buying, my advice is don’t wait! home prices are still projected to keep rising over the next 5 years. That mortgage rate is temporary (you can refinance if rates go down), the price you pay now for a home is the most important factor!
As always, If you have questions I’m just a call or email away!