Are you considering buying a house but waiting for the current bubble to burst? The real estate market right now is at what many consider to be an all-time high. However, this doesn’t mean a bubble will pop and prices will plummet.
Buying a house at the right time can save you money and make you money. Don’t be fooled by trying to over-predict the market. There are several key differences between 2007 and now to help you better plan for your future purchase, so keep reading to learn more.
Back in 2007
In 2007, when the market was on the verge of collapse, a number of things were going wrong. The housing market at the time, and the years leading up to 2007-2008, was filled with houses to sell. With sellers and others being less choosy since they had more to sell, lenders were also less rigorous when giving out loans.
When in 2007 many people lost their jobs, they could no longer pay their mortgages and defaulted, leading banks and other lenders to fail since they couldn’t bail out everyone. It was a domino effect as well as a perfect storm, but it’s very different from today’s housing market.
The Current Real Estate Market
It’s easy to look at the market today and assume we’re sitting on a huge bubble. The prices have never felt so high and covid caused tons of people to lose their jobs, move back home, and other impacts. However, that doesn’t mean it’s the same as 2007.
Today the housing market is more stable. Lenders have been more stringent with mortgage loans, making sure people who receive them can pay for their mortgage. People aren’t receiving loans right and left like in 2007, and there isn’t the same amount of houses available to sell.
The bubble of 2007 isn’t here today, and while prices might feel high, they increased at a more even level than in the past. This means fewer people will be caught off guard after purchasing and end up defaulting.
What About Covid
You might want to ask about the housing market changes related to covid, and how that could cause a crash. But if anything, coronavirus has driven up demand by causing a lower supply.
Lumber prices increasing and the inability for many people (including construction companies) to safely work for several months to a year means there are fewer homes being made. Demand hasn’t seen as big a dip as supply, so the higher prices and fewer houses aren’t a bubble waiting to burst. Things may settle down more for real estate in the next few years, but it probably won’t plummet like the 2007 housing market.
If you’ve been waiting to buy because of a bubble, stop waiting. The real estate market today is more stable and interest rates continue to remain low. It’s not a bad time to consider investing in a house since prices are unlikely to plummet from a crash.
Even with a pandemic and some economic chaos this past year, things aren’t as shaken as they seem. Higher demand has helped drive prices, and they will probably continue to grow. If you’ve always dreamed of being a homeowner, there’s no day like today to start.