What’s different between the current market and the last crash?
The pandemic has caused massive shifts in the market, and we continue to see changes. Whispers are going around about another housing bubble similar to the one we saw in 2006.Let’s address these rumors and find out what’s different in the current market compared to the last crash.
First, it’s important to note that during the 2006 housing crash, supply heavily outweighed demand in the market due to factors such as lower costs of materials. Investors and developers pushed for new construction. The market became overbuilt, which brought on many residential vacancies, leading to price reductions to rebalance the market. Certain mortgage lending practices also prompted credit lenders to tighten their reins. As a result, buyers didn’t truly own their homes.
Fast forward to 2022, and prices have increased dramatically, with demand heavily outweighing the supply due to the pandemic, inflation, and low inventory. Not only has the pandemic changed people’s lifestyles, but it also slowed down production speed and increased the price of materials, labor, and transport. The combination of all of these factors has increased the buyer pool and interest rates.
So what can we expect from this? Nothing drastic like a crash is going to happen. Prices may continue to increase, but the market will gradually balance out again. Builders and investors will continue to build new construction with houses selling for top dollar.
Also, lousy mortgage practices that once affected the market have gotten much better. Buyers are well-qualified in today’s market and can afford their homes. We will see an increase in listings, but there is nothing to fear since a balanced market is already on the horizon.
If you have more questions about the market or are planning your next move, don’t hesitate to call or email me. I’m happy to help create a plan that works for you!