Here are five reasons why the market isn’t heading for a crash.
Is the housing market crashing? While concerns about the stability of the housing market often arise, there are compelling reasons to believe that we may be in a more resilient position. Today, I’ll break down five key factors that indicate a more robust real estate landscape:
1. Distressed property inventory is currently low. There are only four foreclosures and two short sales in Orange County, making up just 0.3% of the total inventory. In contrast, during the Great Recession, distressed properties comprised 67% of the inventory.
2. Total inventory levels have significantly improved. In 2007, during the Great Recession, we had 16,000 homes available, but today, we only have 2,475 properties available, and we’re expecting it to decrease to around 1,500 by the end of the year. With such low inventory, demand remains high.
3. Lending standards have improved. Before the Great Recession, buyers were obtaining loans with low or no down payments, adjustable rates, and negative amortization. Today, buyers are purchasing homes with higher down payments and tighter qualifications. The average buyer FICO score has risen to 746.
4. The employment situation is much better. Unemployment is currently at a historic low compared to the Great Recession. Additionally, almost 50% of homeowners across the country have significant equity in their properties.
5. Most homeowners are not in a rush to sell. They are in a strong financial position with fixed-rate mortgages, secure jobs, and affordable interest rates, often around 4% to 5% or even lower.
While external factors may influence the market, the available data suggests that a crash is not imminent. If you have any questions about this topic or real estate in general, please feel free to comment below or reach out by phone or email. We’re happy to help.