When will the housing market crash? This was one of the top 3 phrases typed into Google’s search engine last spring. Why was this such a popular phrase being searched by many throughout the country? Well, the most likely reason is due to the post-traumatic stress disorder that many still have from the 2008 housing collapse. Needless to say, the housing meltdown was catastrophic for many homeowners and investors alike. Although this is quite understandable given the profound effects from this, it is important to note that the current housing market does not resemble anything like the market of 2008. The 2008 meltdown was an economic crisis, real estate crisis and credit crisis all at once.
Not the same market
Although nobody can predict the future with any certainty, it is important to point out some key differences between the current housing market and the 2008 housing market:
- Inventory: Home inventory has been decreasing for a majority of the time that home prices have been ramping up over the past 18 months. Typically, home inventories must increase dramatically in order for a housing collapse to occur. Furthermore, this tight inventory plus the increased demand for single-family homes with more space has driven prices up.
- Strict lending requirements: Another stark contrast between the 2008 housing market and the current market is the tight lending standards for home buyers obtaining financing today. It has been well established that lending standards were entirely too loose and liberal prior to the 2008 collapse of the housing market. When looking at the current lending environment, there is no comparison with the standards required now in order to qualify for a mortgage.
Most economists agree that we should not see a housing collapse within the next 18 months or so. With this said, we are already beginning to see some signs of normalization in the real estate market. Although the demand for homes is still very high, we are seeing less bidding wars now than we did over the spring and early summer months. In addition, we are also seeing a gradual increase in homes being listed for sale. This is certainly helping ease the pressure on the market and allowing more buyers to have a chance at home ownership. Even though we typically see lower buyer demand during the fall months, we are still seeing a spillover effect from buyers that were unsuccessful in a home purchase during the spring and summer months. Lastly, it is important for sellers to realize that the market is shifting and therefore should prepare accordingly with their listing prices and expectations.
At Live South Florida Realty, Inc. we have assisted many clients build their real estate investment portfolios. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!