I’m sure you’ve heard a lot of buzz from people trying to predict when the next housing crash will be. While I do feel like there’s a good chance that we may see a small recession or some little blips in the economy, there is also good evidence to suggest that we probably won’t see a housing crash like what happened in 2008.
Unlike the last time that we did have a housing crash, credit has been tightened significantly. Lenders are doing their due diligence before approving home loans. The notorious subprime mortgages that helped spur the ‘08 crash are far from the norm in today’s market.
The median price in our area went up 6.4% over 2019 to $295,000, all due to a lack of inventory. Our inventory remains low because people that invest in new building projects simply aren’t doing so as much. A lot of builders say they want to start on such projects, but lack the tradespeople needed to keep up with the high demand.
Another reason why inventory is low boils down to demographics. A majority of the homeowners now are baby boomers, and they’re simply holding onto their homes longer. This is squaring up directly against the millennial generation, which is primed to make the majority of home purchases in the nation. Not enough homes are available, so competition increases and prices follow suit.
Mortgage rates remain at or near historic lows. To put this in perspective, pretend you’re in the market for a $250,000 home. If you wanted to maintain that same monthly payment that you’re budgeting for, but mortgage rates were to increase by even 1%, your buying power would be reduced to about $220,000. Move when it makes sense for your particular situation, but know that it’s always wise to take advantage of really low rates.
If you’re trying to time your purchase by waiting for the next supposed crash, the chances are high that you’re going to miss out on opportunities. Is there a perfect time to buy or sell a home? Objectively, maybe or maybe not. Subjectively, the right time is whenever you decide.
So if you’re ready to buy or sell real estate here in the Madison area, I’d love a chance to talk to you. Give a call or shoot me an email so we can discuss how I can help you achieve your goals for 2020.