Is the Market About to Crash?

Many people remember the impact the 2008 Recession had on the housing market and are understandably concerned with today’s oncoming recession. Thankfully, today’s market factors differ in a few critical ways from those of 2008. Keep reading to discover why a housing crash is not in our future despite the impending recession and why you should still continue your home search:

Housing inventory is still historically low.

In 2008, we were experiencing a huge oversupply of housing inventory whereas today, we are still suffering from a severe housing shortage. The market is leveling out after a few crazy years, but we have a long way to go before we return to normal. In the Greenville market, this transition means that while homes are no longer selling for thousands over asking in less than a day, they are still selling quickly and largely for list price.

Lending standards are tighter today.

One of the biggest contributing factors to the 2008 Recession was unqualified homebuyers defaulting on mortgage payments. Today, new regulations and tighter standards ensure homebuyers are prepared for the financial responsibility of home ownership.

Record levels of equity provide market stability.

The recent rise in home value protects homeowners, providing financial security for millions. Though the home equity increases we have seen are dramatic, they are sustainable. In Greenville especially, the city’s growing popularity and national attention contribute to a reasonable rise in home equity that will provide stability in a recession and hedge homeowners against other economic factors like inflation.

An economic recession is not the same thing as a housing market crash.

Many people assume housing crashes always accompany recessions when, according to the data, the opposite actually proves true. Take a look:

Home prices actually appreciated during the last four of six recessions. In 2008, the recession was caused by a housing market crash, explaining the uncharacteristic drop in home values we all experienced. In every other recession except 1991, home prices stayed constant – and even grew! Homeowners can take comfort in knowing their real estate investment will weather economic uncertainty and potential homebuyers shouldn’t wait for a drop in home values to purchase – according to the data, it isn’t coming!

More than just home prices are impacted by economic recessions. In the last six recessions, mortgage rates didn’t increase, but actually decreased! Take a look:

Currently, the Federal Reserve is using higher interest rates to slow inflation, walking a fine line between stalling inflation and dropping the economy into recession. While interest rates have been changing dramatically this year, you don’t need to fear that a recession would cause an even larger increase. More likely than not, rates would drop again once the Federal Reserve successfully halts inflation.

The bottom line…

The housing market has been crazy the last couple of years, but now we are finally seeing a return to normal. This new market pace, along with an oncoming recession and fears of a housing crash, have homeowners and potential buyers alike worried. However, according to economic factors, market statistics, and our own team’s experience with economic recessions, there is not much to worry about. Homeowners can rest easy knowing their investment is safe and even assisting them through economically challenging times. Potential homebuyers should not hesitate to continue their home searches, as there is little indication that home prices will budge.

If you are looking to take advantage of the market and purchase or sell a home, give Hamilton & Co. a call! We are the top-rated real estate group in the Upstate and our local expertise, strategic marketing plan, and client-focused approach are guaranteed to impress. Give us a call at 864-713-0217 for more information!