So what is going on with the real estate market? Is it a buyer’s market, is it a seller’s market, is it going to crash, or is it going to go up? Well, as we’ve talked about before, real estate prices are affected not just on the buyer side but also on the seller side.
The 2008 Crash: Lessons Learned
The reason that prices crashed in 2008 was because there were too many sellers versus buyers. There were people who had bought multiple houses on speculation with variable-rate loans and no income verification, no job verification, and no asset verification. When their interest rates went up and the variable rates reset, people had to get rid of their houses. That’s what crashed the property market in 2008.
The current market situation
Now it’s different. Prices spiked up; however, there’s not a whole bunch of sellers out there that need to dump properties. The people who own homes right now are more likely primary residents with low mortgages and low interest rates.
Buyers vs. Sellers: The Standoff
You have buyers who are not willing to buy at higher prices, and you have sellers who aren’t willing to sell at lower prices. But why would sellers sell if they have a low mortgage payment and a decent house?
Desperation in the Market
According to many experts, the property market is in a stalemate or standoff because buyers aren’t willing to buy and sellers aren’t willing to sell. The question is: Who’s going to blink first?
Predicting market behavior
Who is more desperate? Somebody who owns a home with equity and low mortgage payments, or somebody who’s renting and needs to buy a house? It’s more likely that the buyers are going to find a way to buy that house.
Potential future scenarios
While some believe prices must go down to make housing affordable, there’s a possibility that real estate has become unaffordable for the average person. Single-family homes may not be affordable for the middle class anymore.
Conclusion: Your Thoughts?
In the property market, people are waiting for it to crash, like 2008 might not happen. It may stabilize, and houses might become unaffordable for the average person. Drop your comments below and let us know what you think! Remember to do the math as you’re looking at whether or not house prices are going to crash or not.