True, this pandemic is causing an economic slowdown. However, from what I read, recovery will begin once the infection rate peaks. Many financial institutes such as Goldman Sachs and Wells Fargo Investment Institute expect strong gains in the 3rd & 4th quarter and into 2021. Here is why home prices will NOT be dropping like they did starting in 2008.
1. There is still a shortage of homes to sell, here and nationwide.
2. Housing is more affordable today. The average family pays 15.5% of their income vs. 25.4% in 2006. Prices are high, however wages have increased and mortgage rates are lower.
3. There are stricter lending standards in place. The 2008 housing crisis was caused by fraud & greed - too much borrowing, flawed financial models & predatory lending.
4. Homeowners today have plenty of equity in their homes. From 2005-2007, homeowners treated their houses like cash machines and refinanced $824 billion worth of home equity. Compare this to 2017-2019 which totaled $232 billion.
5. Home values increased in 3 of the last 5 US recessions. (And, in 1991, they only dropped by 2%.)
There are many variables to this current housing market – work with a professional who can keep you updated on its impacts. Feel free to contact me for your real estate needs at 603-526-4116, www.DonnaForest.com, or Donna@DonnaForest.com
You’ll be moving in the right direction with Better Homes & Gardens Real Estate - The Milestone Team.