There are three reasons why this market is different from the one in 2008.
If you’re worried about an impending market crash like we saw back in 2008, don’t be. There are three main reasons why this market is different from that one:
1. Inventory. We’re seeing a shortage of inventory right now that we didn’t see back in 2008. We’re about a million homes short of having the level of inventory we need to meet demand, and a primary reason is that builders quit building homes from 2010 to 2012 and sold off their existing land inventory. A lot of small builders even went out of business. Today they’re all playing catch up.
2. Mortgage rates. Before the previous market crash, mortgage rates ranged from 5% to 7%, but now they’re much lower. They’re currently hovering around 3.5%, and we’re seeing some buyers get rates as low as 2.75%.
3. Mortgage guidelines. Mortgage guidelines are much stricter now than they were in 2008. Back then, lenders were pretty much handing out loans.
What do I foresee happening in the next 12 months? First, I think prices will start to level. We’re already seeing this in the larger metro markets, and when we see something happen in those markets, it usually trickles down into the mid-size markets (like the Lakeland area, for instance). The average days on market for homes is starting to creep up as well. Interest rates should stay low, if not increase just a bit.
Lastly, rental rates should remain high. This is already pushing people to buy homes, so we should see a steady flow of buyer demand. The good news for buyers is that, although prices are high, affordability is still there due to low mortgage rates.
If you’d like to talk more about our market or have any real estate questions at all, feel free to call or email me. I’d love to speak with you.
