What can we expect in the real estate market in 2021? With bidding wars and lack of inventory, many people are asking me if we feel the market may crash, you know the saying, what goes up, must come down. I understand how scary it can be, thinking about what to do. I’m in the market just like you are.
Hi, I’m Jennifer Prestwich, the Prestwich Group at Madison & Company Properties. After selling hundreds of homes here in Adams and Broomfield counties in Colorado, I can tell you this is a very unpredictable time.
But let’s truly compare what happened back in 2008 when we had one of the biggest crashes in American history to today.
According to the National Association of Realtors Chief Economist, Lawrence Yun, he says, “Such a frenzy of activity, reminiscent of 2006, raises questions about a bubble and the potential for a painful crash. The answer: there is no comparison. Back in 2006, dubious adjustable-rate mortgages taxed many buyers budgets. Some loans didn’t even require income documentation. Today, buyers are taking out 30-year fixed rate mortgages. 14 years ago, there were 3.8 million homes listed for sale, and home builders were putting up about 2 million new units. Now, inventory is only about 1.5 million homes, and home builders are under-producing relative to historical averages.”
The key phrase from that quote, was when he said there is no comparison.
Also, major contributors to the buildup in 2006 and crash in 2008, was that stated income loans were being given to buyers. Buyers were being qualified for a loan that they simply could not afford, and in many cases, little paperwork was needed to qualify someone for a loan. They would simply state what they made, and that was considered enough. Do you remember these were often referred to as liars loans?
That’s not the case now. Lenders pretty much want a pint of blood and a pound of flesh in order to approve you these days. They go above and beyond and qualifying buyers for a loan, and making sure that they have the means to pay. That should give us some relief and respect to the sustainability of today’s housing market. Also, homes appraising at exceedingly higher values from one week or one month to the next, had a significant impact on the crash, and that’s just not happening anymore. There are stringent guidelines for appraisers and the amount of bank will lend for a house.
I think we should all take some solace knowing that there are many more factors that led to the crash of 2008 that we’re just not seeing today. I’m Jennifer Prestwich, the Prestwich Group at Madison & Company Properties. And I’m always here to help. Reach out any time if you’ve just got questions, I’m more than happy to help you understand the real estate market, here in Adams and Broomfield counties, Colorado. I’m out here living the Denburbs life, and I wanna help you do it too!