With home prices on the rise and more people entering the market to buy, it’s only natural to wonder if we’re headed for another housing crash. But there are several factors that suggest otherwise. Here’s a look at why today’s housing market isn’t heading for a crash.
Mortgage Standards Are More Strict
Mortgage standards have become more stringent in recent years, which makes it difficult for those looking to purchase a home.The reality is lenders are taking fewer risks these days, so customers need to make sure they understand all their options and the requirements to qualify for a loan.For example, borrowers may need high credit scores and sizable down payments than in the past. Additionally, lenders are now requiring formal documentation of income and assets while rigorously checking financial backgrounds. Not to mention that potential buyers must demonstrate employment stability with long-term tenure at one company or several firms within their given field of expertise. All this is part of an established effort to ensure savvy lending practices that protect both borrower and lender from unnecessary exposure.
Foreclosure Volume Has Declined a Lot Since the Crash
Foreclosure volume has dropped drastically since the housing market crash of 2008. Although many families lost their homes during that time, the events of that era have served as a catalyst for necessary change and reform. Since then, laws and regulations have been put in place to better protect homeowners from excessive debt, incarceration for unpaid debts and other predatory lending practices. As a result of these changes, foreclosure activity has been on the decline and is far lower than it was before the crash forced us to take a hard look at our industry practices. While we must continue to be vigilant in protecting homebuyers from unfair lending practices, it is encouraging to see how far things have come since those devastating times.
The Supply of Homes for Sale Today Is More Limited
Homebuyers may be feeling a bit frustrated – it’s currently a seller’s market, and the supply of homes for sale today is more limited compared to years past. There are many reasons why this is the case, including the fact that many sellers remain hesitant due to economic uncertainty, while potential buyers are eager to capitalize on historically low-interest rates. As a result, inventory is selling quickly and often bidding wars drive prices up beyond what certain buyers had planned for. Therefore, it’s important for homebuyers to enter the market prepared with suitable financing lined up and ready to go if they hope to get their offer accepted in such a competitive environment.
Bottom Line
If recent headlines have you worried we’re headed for another housing crash, the data above should help ease those fears. Expert insights and the most current data clearly show that today’s market is nothing like it was last time.