As I mentioned on our last market update, this month’s video 🎥 series is all about what to expect in the real estate market in 2021. With bidding wars and the lack of inventory , many people are asking us if we feel the market may crash 💥. You know the saying, “What goes up ⬆️ must come down ⬇️ .” I understand how scary it may be thinking about what to do. Are you thinking about buying a home in Houston, Cypress or Katy, Texas?
Hi, I’m Natasha Carroll here with Natasha Carroll Realty. After helping our sellers over the years, I can definitely say this is a very unpredictable time. But let’s truly compare what happened back in 2006 when we had one of the biggest crashes in American history. According to the National Association of Realtors, chief economics, Lawrence Yen, he says, I quote, “Such a frenzy of activity reminiscent of 2006 “raises questions about a bubble “and a potential for a painful crash.” The answer, there is no comparison. Back in 2006, dubious adjustment rate mortgages taxed many buyers’ budgets. Some loans didn’t even require income documentation. Today, buyers are taking out 30 year fixed mortgages. 14 years ago, there was 3.8 million homes listed for sale and home builders were putting up about two million new units.
Now inventory is only at 1.5 million homes, and home builders are under-producing relative to historical averages. So the thing to notice from the quote was when he said there is no comparison. Also, major contributions to the crash back in 2006 was the fact that stated income loans were being given to buyers. Buyers were being qualified for a loan that simply could not afford it. And in many cases, little paperwork was needed to qualify for a loan. Someone would simply state what they made and that was considered enough to qualify for a loan.
This is not the case today. Lenders 🏦 pretty much watch your first born child in order to approve you for a loan. They go above and beyond in qualifying buyers for a loan and making sure they have the means to pay for it. That should give you some relief in the respect of the housing market and its sustainability. Also homes were being appraised at extremely higher values from one week or one month to the next and had a significant impact on the crash. This is not what’s happening anymore. There are stringent guidelines for appraisals and the amount a bank will lend for a home. I feel we should all take solace knowing that there are many more factors that led to the crash in 2006 that we just aren’t seeing today. Of course, I’m Natasha Carroll here with Natasha Carroll Realty, and we’re always here to help. Reach out to us anytime if you have any questions. Have an awesome home buying and selling day.
