I would like to start off by saying recession does not equal housing crash. In fact the 2008-2009 recession is the ONLY recession that created a housing crash in the history of our country.
It is only natural as most of us still have the sting of the 08 recession fresh in our minds (the Great Recession) to equate it to the largest housing crash of our country’s history so I am here to set some things straight.
- Our country had a saturated supply of new homes
( 3.7 million units to a normal market of 1.2 million units )
- Lending regulations were nearly non-existent and fraudulently represented
- The cash out refi boom created negative equity in homes
A perfect storm for a crash. Too much supply, over borrowing and little – zero equity in existing homes.
Now let’s compare that to today:
- Our country has less than 3 months of supply ( 620,000 units to a normal market of 1.2 million )
- Lending programs are now set to clear only the qualified. Stated income is no longer available nor are most zero down options.
- The average American home owner, due to last years 24% increase in prices has 50% or more equity in their home. This most recent refi boom, more than 30% of people refinanced for the lower rate not the cash out option.
Lack of inventory still holds us in a sellers market, however the up tick of rates has caused an expected slowing of people buying, leading to homes sitting on the market longer. While homes are sitting longer we are not seeing the average sales price come down. The average days on the market over the last year hovered around 6 days while today we are averaging 26 ( average market, 90 days ).
So I ask again “What does this recession mean to the housing market?”
Here is my very politically correct answer, very little.
Real Estate is and always will be situational, if it is right for your current situation to sell, sell! If you have owned your home for north of 5 years chances are high you are sitting on a ton of equity. People are still downsizing and families are still growing. If you fit that category feel very comfortable in your decision to make that move.
How this recession is effecting housing is the rate influx in order to curb inflation. The days of multiple offers and homes going well above list are fewer and farer between. Buyers are savvy and are more in the drivers seat today than they have been in years. Be prepared to sit tight for a little longer sellers, in todays climate buyers today will likely come attached with home inspection, closing costs and appraisals.
The REALTOR associations nation wide are working with legislature to find ways to get more inventory on the market especially more affordable inventory… meaning building incentives and density adjustments. We are on the forefront of those discussions being involved both on a local and state wide platform. We are always here to answer questions, so let’s go grab coffee, tea or maybe even wine to talk shop.