Two Reasons Why the Housing Market Won’t Crash
You’ve probably heard some chatter about the economy lately, maybe even some whispers about a possible recession. And let’s be real, that kind of talk tends to make people nervous about the housing market. But here’s the good news—there’s no need to panic. The housing market isn’t about to crash. Let me explain why. Real estate journalist Michele Lerner defines a housing market crash as when “home values plummet due to a lack of demand for homes or an oversupply.” With that in mind, here are two key reasons why a crash just isn’t in the cards right now. 1. Demand for Homes Is Higher Than Supply One of the biggest reasons behind the 2008 housing crash was an oversupply of homes. There were just too many houses and not enough buyers. Well, today’s market is the complete opposite of that. Generally speaking, a balanced housing market has about a six-month supply of homes. That means there’s enough inventory to meet demand without prices falling or spiking. Now, let’s take a look at where we stand today, thanks to some data from the National Association of Realtors (NAR). In the lead-up to the 2008 crisis, there was a whopping 13-month supply of homes—far too much. Today, though, we’re looking at just 4.2 months of supply. That’s well below what’s considered balanced, which means demand is outpacing supply big time. When there are more buyers than there are homes available, prices tend to stay stable or even increase—not crash. Now, to be fair, inventory levels can vary depending on the market. Some areas might be more balanced, while others could have a slight oversupply, which could affect local prices. But nationally, the housing market is dealing with a shortage of homes. That’s a huge difference compared to 2008. As Lawrence Yun, Chief Economist at NAR, puts it:"We simply don’t have enough inventory. Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely." Want more insights on Baltimore specifically? Check out my post on Is Now the Right Time to Buy a Home in Baltimore?. 2. Unemployment Is Still Low Another key factor that drove the 2008 crash was unemployment. As people lost their jobs, they couldn’t make mortgage payments, which led to a wave of foreclosures. That, in turn, put more homes on the market, causing prices to plummet. But today’s employment picture looks a lot different. Here’s a quick look at where unemployment stands right now compared to the 2008 crisis and the long-term average: Back in 2008, unemployment was sky-high at 8.3%. The 75-year average is around 5.7%. And today? We’re sitting at just 4.1%. More people are working, which means more people can make their mortgage payments. That’s a big reason why we’re not seeing a wave of foreclosures like we did back then. In fact, with so many people still working, we’re seeing plenty of demand for homes, which helps keep prices up. To get more context on how employment and housing market trends are playing out in Baltimore, you might want to check out Top 5 Things to Know About the Baltimore Housing Market. Today’s Housing Market Is Stronger Than in 2008 It’s totally natural to feel uneasy with all the talk about a recession and economic uncertainty. But the housing market today is nowhere near where it was in 2008. As Rick Sharga, Founder and CEO of CJ Patrick Company, says:"Literally everything is different about today’s housing market dynamics than the conditions that led to the housing crisis." So, what does that mean for you? Simply put: Demand for homes is still high, supply is low, and people are working. These key factors are going to keep the housing market stable, preventing a repeat of the 2008 crash. Bottom Line Look, the housing market today is in a much better place than it was in 2008. But remember, real estate is local. So, if you have any questions about how these national trends are impacting our Baltimore market, feel free to reach out. I’m here to help you navigate it all and make the best decisions for your situation. If you want to dive deeper, check out my post on Why Baltimore Is Still a Hot Real Estate Market in 2024.
Maximize Your Tax Refund: The Smart Path to Homeownership in Baltimore
Unlock the Potential of Your Tax Refund for Your Dream Home in Baltimore Have you been meticulously saving up to buy a home this year in Baltimore? If you're closely watching your budget, you're likely aware of the various expenses involved in purchasing a home – from the crucial down payment to unavoidable closing costs. However, there's a seasonal financial perk that many tend to overlook – your tax refund. As the annual tax season draws to a close, many of us eagerly anticipate a refund. Credit Karma highlights a brilliant use for this windfall: "If buying a home is on your agenda, a tax refund can kickstart your journey to homeownership or accelerate your savings." The average tax refund is experiencing a bump up this year, with CNET reporting a 6.1% increase from the previous year, reaching an average of $3,081. This uptick can play a significant role in your home-buying budget. Here's how: Invest in Your Future with Your Tax Refund Boost Your Down Payment FundThe larger your down payment, the better the terms you might secure for your mortgage. Your tax refund can be a substantial contribution towards meeting your down payment goal, potentially saving you money in the long run. Cover Closing CostsTypically, closing costs can run between 2% and 5% of the home's purchase price. Your tax refund could significantly dent these expenses, making the financial burden of buying a home more manageable. Negotiate a Better Mortgage RateIn some cases, you can use your refund to buy down your mortgage rate. A lower rate means lower monthly payments, which can make a significant difference in your overall financial planning. Remember, working with a team of trusted real estate professionals can demystify the process and set you up for a successful purchase. Bottom Line: Your tax refund is more than just a bonus; it's an opportunity to make significant strides towards buying your home in Baltimore. If you're ready to explore how your tax refund can help you purchase a home, contact us. Your path to homeownership may be smoother than you think. For more insights into Baltimore's real estate scene and tips for homebuyers, check out our latest posts on navigating mortgage rates and making the most of your home-buying budget.
Don’t Let Your Student Loans Delay Your Homeownership Plans
Greetings, aspiring homeowners! If the thought of student loans is casting a shadow over your homeownership dreams, you're not alone. With the burden of debt weighing heavily on many, the path to purchasing your own home can seem daunting. However, it's time to shine a light on the possibilities and navigate the journey to homeownership, student loans notwithstanding. Understanding the Impact: Recent findings reveal that about 60% of U.S. adults with student loans have postponed significant financial milestones, including homeownership. This hesitation is even more pronounced among Gen Z and millennials, with the figure jumping to 70%. Yet, this doesn't have to be your story. The Possibility of Homeownership: Contrary to the belief that student loans are a barrier too high to overcome, many are discovering that owning a home isn't out of reach. According to the National Association of Realtors, 38% of first-time homebuyers carry student loan debt, with the average amount hovering around $30,000. This statistic is a beacon of hope, showcasing that, with the right strategy and guidance, homeownership is within grasp, even amidst financial obligations. Strategizing Your Path Forward: Income and Home Loan Programs: A steady income stream and familiarity with various home loan programs tailored for individuals with student loans can be your stepping stones. Particularly noteworthy is the Maryland Mortgage Program (MMP), a beacon of hope for residents. This innovative program doesn't just help you secure a mortgage; it goes a step further by potentially paying off your student loans. The MMP then incorporates this amount into your mortgage, creating a streamlined path towards homeownership without the separate burden of student loans. Professional Guidance: Consulting with a trusted lender can demystify the process, offering personalized advice based on your unique situation. Articles from reputable sources like Bankrate underscore the feasibility of managing a mortgage alongside student debt, and the MMP adds an extra layer of accessibility for Maryland residents. For more insights into navigating the housing market and tips on making homeownership a reality, explore our posts on "Building Wealth through Homeownership: A Realtor's Guide in Baltimore" and "Unlocking Your Dream Home: Clever Tips to Secure a Down Payment in Baltimore". Your student loans don't have to be the roadblock between you and your dream home. With more individuals breaking through the barriers of debt to claim their slice of the American Dream, the message is clear: homeownership is achievable. Dive into the possibilities, seek professional advice, and you too can embark on the rewarding journey to owning your home. Ready to explore your homeownership options? Let's navigate this journey together. Contact us today to start turning your homeownership dreams into reality.
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