Main reasons why this real estate boom is probably not a bubble

MINT HILL, NC – Right now, no matter which measure you choose, home selling prices are at all-time highs. In most of the United States, prices are not expected to drop anytime soon.

For many experts, it is reminiscent of the 2000s when the great crash happened. However, this real estate market is very different compared to the 2000s.

The 2000s market was driven by bad mortgages and bad valuations. The unwanted mortgages led to a very weak foundation which caused the crash. Today’s market is quite different. Let’s take a look at a few reasons why this current market isn’t a bubble like the 2000s.

Stricter lending standards

There isn’t a huge credit boom like it was in the 2000s. Instead, banks and lenders have applied stricter standards. This has in fact led to a lower ratio of home loans to total loans.

It is more common to experience a booming real estate crisis due to credit bubbles. Right now there is no credit bubble. Instead, there is an imbalance of supply and demand causing the market to be hot.

Home shortages

Another reason many believe this housing boom will not be a bubble is the housing shortage. In 2008, the real estate crisis was not due to the decrease in the number of homes on the market.

One of the main reasons for declining stocks today is the pandemic. However, the boom is also being caused by many buyers looking for homes due to higher savings rates during the pandemic and the stimulus packages.

Houses are currently affordable

At first glance, rising house prices make it seem like houses are not that affordable. However, mortgage payments for homes in the United States represent a very small percentage of household income. This means that more people are able to afford a home than ever before, even though prices are on the rise.

Lower interest rates are helping to keep homes affordable, for now. While things can certainly change, at the moment this boom is showing no signs of being a bubble.

Real estate agents are reporting low home inventories and rising home prices. However, many believe prices still have a way to climb before buyers can no longer afford homes. As long as interest rates stay low, there will be no sign of a housing bubble.

I would love to be a part of your journey when the time is right for you. If you ever have a real estate question or need, or if you know someone who does, trust that you can turn to me. I’ll help you make the right choice! Anna Granger (704) 650-5707 | [email protected] | www.1stchoicepropertiesinc.com

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