A must read article from our friends at KCM. Stop sitting on the sidelines waiting for home prices to fall! If you’re holding out hope that the housing market is going to crash and bring
home prices
back down, here’s a look at what the data shows. And spoiler alert: that’s not in the cards. Instead, experts say
home prices
are going to keep going up. **Today’s market is very different than it was before the housing crash in 2008. Here’s why.** #### **It’s Harder To Get a Loan Now – and That’s Actually a Good Thing** It was much easier to get a home loan during the lead-up to the 2008 housing crisis than it is today. Back then, banks had different
lending standards, making it easy for just about anyone to qualify for a home loan or refinance an existing one. Things are different today. Homebuyers face increasingly higher standards from mortgage companies. The graph below uses
data
from the
_Mortgage Bankers Association_
(MBA) to show this difference. The lower the number, the harder it is to get a mortgage. The higher the number, the easier it is:  []() The peak in the graph shows that, back then, lending standards weren’t as strict as they are now. That means lending institutions took on much greater risk in both the person and the mortgage products offered around the crash. That led to mass defaults and a flood of
foreclosures
coming onto the market. #### **There Are Far Fewer Homes for Sale Today, so Prices Won’t Crash** Because there were too many homes for sale during the housing crisis (many of which were short sales and
foreclosures), that caused home prices to fall dramatically. But today, there’s an inventory shortage – not a surplus. The graph below uses data from the
_National Association of Realtors_
(NAR) and the
_Federal Reserve_
to show how the months’ supply of homes available now (_shown in blue_) compares to the crash (_shown in red_):  []() Today, unsold inventory sits at just a
3.0-months’
supply. That’s compared to the peak of 10.4 month’s supply back in 2008. That means there’s nowhere near enough inventory on the market for home prices to come crashing down like they did back then. #### **People Are Not Using Their Homes as ATMs Like They Did in the Early 2000s** Back in the lead up to the housing crash, many homeowners were borrowing against the equity in their homes to finance new cars, boats, and vacations. So, when prices started to fall, as inventory rose too high, many of those homeowners found themselves underwater. But today, homeowners are a lot more cautious. Even though prices have skyrocketed in the past few years, homeowners aren’t tapping into their equity the way they did back then. _Black Knight_
reports
that tappable equity (the amount of equity available for homeowners to access before hitting a maximum 80% loan-to-value ratio, or LTV) has actually
reached an all-time high:  []() That means, as a whole, homeowners have more equity available than ever before. And that’s great. Homeowners are in a much stronger position today than in the early 2000s. That same report from
_Black Knight_
goes on to
explain: >
_“Only 1.1% of mortgage holders (582K) ended the year underwater, down from 1.5% (807K) at this time last year.”_ And since homeowners are on more solid footing today, they’ll have options to avoid foreclosure. That limits the number of distressed properties coming onto the market. And without a flood of inventory, prices won’t come tumbling down. ### Bottom Line While you may be hoping for something that brings prices down, that’s not what the data tells us is going to happen. The most current research clearly shows that today’s market is nothing like it was last time. Have more questions? Give Chris Simpson a call 231-215-7229. Chris Simpson
Nexes Realty Inc.
880 W. Broadway Ave
Muskegon, MI 49441 * * * ### Discover more from Muskegon Real Estate Agent, Chris Simpson,Homes For Sale, Muskegon Homes,Muskegon House For Sale, Muskegon Real Estate, West Michigan Real Estate Agent, Muskegon Realtor Subscribe to get the latest posts sent to your email. Type your email… Subscribe ### Share this: - X
- Facebook Like Loading... Reblog Like - 1 like ### _Related_ Home Prices Might Drop but Won’t Crash: What Buyers Should KnowOctober 5, 2022In "Muskegon Homes" FACT VS FICTION: THE TRUTH ABOUT TODAY’S HOUSING MARKETMay 17, 2022In "Buying a home" ARE WE IN A HOUSING BUBBLE?March 23, 2022 ### Leave a comment Cancel reply Δ - - Comment
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