If you’re worried about an imminent market crash, don’t be. Here’s why.
Here are five reasons why we won’t see a housing market crash and subsequent home price freefall anytime soon:
1. A lot of homeowners don’t have mortgages. Roughly 38% of all homeowners own their homes free and clear. That’s amazing!
2. We’re working under sound economic principles. Unlike with the last housing market crash, our lenders are being smart. Supply is extremely low, and demand is extremely high, which is the opposite of the situation we had before when there was a glut of homes for sale and lending standards were so lax that anyone and everyone was buying homes whether they were qualified or not.
3. Home equity. I’ll bet you didn’t know this, but the average homeowner has roughly $200,000 worth of equity, which is an unprecedented amount.
“Unlike with the last housing market crash, our lenders are being smart.”
4. Higher lending standards. As I mentioned, lenders are much more critical of borrowers than they were during the last housing market crash. Gone are the days of stated income applications, when fogging up a mirror and making a salary were all you needed to do to get approved for a loan.
5. Forbearance. This is a subject you may have heard a lot about lately. Forbearance is when a lender essentially allows a borrower to put their payments on pause. While a lot of people have taken advantage of this program, 85% of them have already repaid their balance or have a repayment plan in place to bring them up to date. Don’t expect a tidal wave of foreclosures to hit the market anytime soon.
If you have questions about this or any real estate topic, let me know. I’d be happy to make a future video addressing your concerns.
