Housing Bubble Fears for 2022
Your fear and your feelings are completely understandable especially if you had been through the real estate crash in 2008. Maybe your home value plummeted, or if you were of the younger generation, you possibly saw your parents struggle with mortgage payments. Many people even lost their homes. That was a despairing time for sure and one that I hope to never experience ever again.
Recently, I have noticed an increase in people asking me if we are on another trajectory of a housing crash. My answer … the current market is volatile, but I do not feel it is on course for another housing crash.
Here are 4 of my top reasons on why I feel that we are not headed anywhere near a crash.
- Mortgages – The subprime lending that was a major cause of the 2008 crash is now regulated in today’s real estate market. With adjustable-rate mortgages, you now must show you can afford an increase. Plus, many people now opt for a fixed-rate mortgage which protects them again future increases.
- Stabilization – I cannot deny the fact that over the last couple of years the market has been overheated and cannot possibly continue to drive the already high home values even higher. I feel that we are overdue for a market correction and that is the reason that the housing market has shown recent signs of slowing. Sure, home values many stabilize or possibly slightly decrease, but a market correction is not the same as a crash. There is no evidence that a housing correction will lead or be comparable to the 2008 global financial crash.
- Desirability – Even in the housing crash of 2008, Philadelphia and the surrounding suburbs did not take as big of a hit than other states. We are lucky to live in an area that historically, has always been desirable and valuable.
- Supply and Demand – Buyer demands still remains very high and the inventory still remains very low. Affordability has become an issue due to the higher mortgage rates, which is another reason that a market correction may not be such a bad thing. Even still, with the increase of rates, there are still plenty of buyers that are looking to purchase a home.
The bottom line is real estate has always proven itself to be the backbone of American wealth even though homeownership should not always be about the value. If you have lived in your home for at least a few years, or you are looking for a home to call yours for years to come, now is a great time to buy or sell. The rates may be higher, but if they dip down, they can always be refinanced. However, if they go any higher, you may completely miss your opportunity to purchase a place to call home.
Call Scott Furman at 610-687-2962 to speak to him about our local real estate market trends. There is a reason his clients consider him their real estate advisor for life.
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