After several years of working in the home renovation industry and being on both sides of the remodeling process, I’ve come across several items that make a substantial difference in the end
How Is The Market Going In 2019
There has been a lot of speculation regarding where our market is headed in 2019. With high interest rates that are continuing to increase and price of homes that are at the top of the market what will the market do? Will the market continue to increase or are we headed for another crash?
Well every indication is pointing to signs that our market will slow down with certainty however when and how bad will it be? Well I can tell you that it will not be close to what we experienced during 2008-2013 since many variables are different. In 2008 the market with saturated with a lot of mortgage fraud activity and lack of mortgage guidelines that was the root cause of our crash. In 2008 consumers were still able to get no doc loans or stated income loans with no verification of income. This allowed a lot of buyers to purchase homes but the buying power was superficial since the buyers were not qualified buyers who where vested in since many loans were zero down.
Banks were giving loans with over inflated appraisals where home buyers were already upside down when they closed on their new home. All of this coupled with a struggling automotive industry and a downtown in bankruptcy lead to thousands losing their jobs left with homes that they could not afford and could not sell since they were underwater. How did we sell these homes? The only way to sell them was to convince the bank that the market value of the home was less than the outstanding loan. This became the birth of short sales for several years to come.
Today’s market the mortgage industry and appraisal industry has changed significantly with governmental mandated changes. Therefore, we don’t have the overinflated home values or the zero down mortgages or the stated income etc. Buyers are qualified and home values were not inflated so why would we be headed for a market adjustment?
The market did return to its previous values through buyer demand which pushed it to a sellers market. The reason why buyers were able to continue to buy to push demand above supply increasing the price was because interest rates have been low for many years giving homebuyers buying power. The buying power does not come without an expense and that is inflation. Interest rates control the economy and inflation. Since interest rates have been historically low for a significant time causing our economy to over produce by 4 times. This means a recession is on its way we just do not know how deep it will be.
The ultimate question is how will this affect the real estate market? A lot will depend on the employment status where then a sense of urgency will enter the market and sellers will either be motivated or forced to move.