Will The Real Estate Market Crash In 2021?- South Bay Real Estate
Will The Real Estate Market Crash In 2021?
Are We in a Housing Bubble?
When asked if there will be a real estate market crash in 2021… Experts Say No… During the Great Recession, just over a decade ago, the financial systems the world depended on started to collapse.
It created a panic that drove some large companies out of business (ex. Lehman Brothers) and many more into bankruptcy.
The financial crisis that accompanied the current pandemic caused hardship to certain industries and hurt many small businesses.
However, it hasn’t rattled the world economy. It seems that a year later, things are slowly getting back to normal for many companies.
Why is there a drastic difference between 2008 and now?
(LINKS TO ALL THE SLIDES ARE BELOW)
In a post from RealtyTrac, they explain:
“We changed the rules. We told banks they needed more reserves and that they could no longer underwrite toxic mortgages.
It turns out that regulation — properly done — can help us navigate financial minefields.”
Here are the results of that regulation, captured in a graph depicting the number of failed banks since 2007.
Wow… look at the HUGE numbers during the Great Recession! And almost no failures now. that’s encouraging!
Here are four expert opinions from professionals and organizations that have devoted their careers to giving great advice to the housing industry.
The Joint Center for Housing Studies in their The State of the Nation’s Housing 2021 report:
“… conditions today are quite different than in the early 2000s, particularly in terms of credit availability. The current climb in house prices instead reflects strong demand amid tight supply,
helped along by record-low interest rates.”
Nathaniel Karp, Chief U.S. Economist at BBVA:
“The housing market is in line with fundamentals as interest rates are attractive and incomes are high due to fiscal stimulus,
making debt servicing relatively affordable and allowing buyers to qualify for larger mortgages.
Underwriting standards are still strong, so there is little risk of a bubble developing.”
Mark Fleming, Chief Economist at First American:
“Looking back at the bubble years, house prices exceeded house-buying power in 2006 nationally, but today house-buying power is nearly twice as high as the median sale price nationally…
Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”
Soooo… Will The Real Estate Market Crash In 2021?
Bottom Line-
None of us know what’s going to happen in the future, yet the signs of a bubble aren’t currently there.
The Notice of Defaults here are minimal, pending short sales are almost non existent and local mortgages under forbearance are extremely low.
Also, homeowners have more equity than ever. In 2008, homeowner equity was super low due to 100% financing, which led to tons of foreclosures and short sales.
Many of us have suffered over the past year. However, the economic toll of the current recession was nowhere near the scope of the Great Recession, and it won’t result in a housing crisis.
All four strongly believe that we’re not in a bubble and won’t see crashing home values as we did in 2008.
(SHOW THESE SLIDES BELOW)
And they’re not alone – Goldman Sachs, JP Morgan, Morgan Stanley, and Merrill Lynch share the same opinion.
One year from now… we’ll know…
Now is still a great time to sell and buy because of hysterically low interest rates!
Call me when you’re ready to move!
Cheers!
Virtually Yours…
Daryl Palmer Real Real Estatetist
Remax Estate Properties RE# 1986622
SLIDES ARE BELOW
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Link to my Blog Post:
Are We In A Housing Bubble?
Link to my other Blogpost:
Why this is not like 2008 again
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