What Is Happening To The Real Estate Market

What Is Happening To The Real Estate Market

What is Happening to the Real Estate Market? 

Question that many Americans keep asking "Is the real estate market going to crash?" The previous housing market was fueled by an artificial demand created by mortgage standards that were far too lenient. When this demand was shut off, a flood of inventory came to market. This included heavily discounted distressed properties (foreclosures and short sales). 

Today’s market is different. Mortgage standards are tighter than they were prior to the last boom and bust. Tighter lending standards have made a difference in the "flip" market. Lenders only finance 55 percent of the home's value. The "flipper" has to come up with the rest. During the subprime crisis, banks lent 80 percent or more. There is no fear that a rush of foreclosures will come to market. The Mortgage Bankers’ Association just announced that foreclosures are lower today than at any time since 1996. Also homeowners are not taking out as much  equity out of their homes. Home equity rose to $85 billion in 2006. It collapsed to less than $10 billion in 2010. It remained there until 2015. By 2017, it had only risen to $14 billion.

Home prices have appreciated considerably over the last five years. This has some concerned that we may be in for another dramatic correction.However, recent statistics suggest home values will not crash as they did a decade ago. Instead, this time they will come in for a soft landing.Case Shiller looks at the percentage of appreciation as compared to the same month the year prior. Here is a graph of their findings over the last ten months:

No Worries… Home Prices Coming in for a SOFT Landing | MyKCM

 Bottom Line

As we can see, home price appreciation is softening as more inventory comes to market. This shows that real estate prices are not crashing, but merely returning toward historic appreciation numbers of 3.6% annually. Home prices are leveling off. Long term, that is a good thing for the housing market.

Would you like to know what your home is worth? Here is a free tool, click to Get Your Free Home Value Estimate


Diana Polovko Headshot
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Phone: 984-833-9233
Dated: March 4th 2019
Views: 242
About Diana: Honesty, integrity, and hard work are the key elements of my business. Behind every home sale or pur...

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