The Market - It's Changing

The market has begun to shift, in fact by the end of the second quarter this year we should be in a recession. A recession is defined as two negative quarters of growth. Should we panic? Are house prices going to drop 18% as they did in 2008? I would say no. You see there are many large differences between that time and this.

The first large difference is the recession will affect the housing market not be caused by the housing market. Last time the overinflated market with paper approvals that required no show of income and every other sketchy loan caused major issues. People who could barely afford one home owned several. Once it all came due so many foreclosures happened, banks' loans had large financial issues and it sent a ripple through the economy. Yes, I know this is a very high level and much much more in-depth happened. The Big Short movie does a nicer job, and if you want dry but very real insight read the book. The market now has more equity than it ever has and they predict the foreclosures rate will be very low due to the ability of the homeowner just to refinance. They even have a 40-year loan option to help save people in foreclosure.

The second is the shortage in the housing market. Although the crazy bidding wars are over in my area (for the most part) we still have an inventory shortage. I could write a whole article on this nut I believe its due to fewer housing starts as builders and flippers slowing down with the inflation and step-up buyers are staying put because they are locked in at about a 3% rate and now you asking them to swallow a 6% rate on their more expensive home. No thanks, I'll stay here. I just pulled the MLS report and the supply of inventory is better than last year at 1.28 instead of less than a month of inventory. For a stable market, we are looking for 3 months of inventory.

My reason for this blog is to help you and myself realize; that yes times won't be as good as the last free crazy years, but we are crashing and burning, just coming down to a more normalized market. Make your calls, do your marketing, and follow up and you still will be fine. It's now that we see who has been putting in the work and who has been coasting and letting a good market carry them. Don't be the second one!