Source: Realty Biz News —
Many people remember the financial and housing crises of 2007 and 2008. That’s when the overheated housing market didn’t just slow down but instead went into a tailspin with millions of home prices dropping below the amount of the mortgage. These are known as ‘underwater’ mortgages. It also became known as the Great Recession when foreclosures became the icon of the era.
With that in mind, many prospective homebuyers today think it might be wise to put off their home purchase until the market bottoms out so they can snag a home at a great price. But times and circumstances are not the same as in 2008. We are not going to see hundreds of thousands of homes headed to foreclosure. We are not going to see a glut of home values fall below the value of the mortgage. Existing homes are going to retain their value and prices are going to continue going up at a more moderate pace. Here’s why…
The median U.S. home listing price was $449,000 in July 2022, about the same as it was in June, according to data from Realtor.com. That’s an increase of 16.6% year-over-year. This is contrary to 77% of homebuyers believing there’s a bubble where they live. Home prices are not being driven by loose lending practices and rampant investor speculation in the market as they were before the Great Recession.
As a real estate broker for over 50 years, and a licensed real estate appraiser for over half that time, I have seen a lot of “swings” in market value, but overall, UP. And, while these past 5 years we have all seen unrealistic increases in real estate value, I do not anticipate a significant reduction in values on the horizon. Why not? Overall population increases stimulate demand. Yet, supply is not increasing proportionally. Labor and material costs are not likely to drop significantly. Conclusion…if the laws of supply and demand are allowed to function without governmental restraint, the value trend may slow a bit temporarily, but will continue upward.