There are real concerns about the economy overall and unemployment levels, but this is not a housing crisis like 2008 for many reasons. Key factors that lead up to the housing market crash are not the same issues we are experiencing today. Unlike the years leading up to the crash:
1. We do not have nearly the same level of home appreciation as we saw in the early 2000’s.
2. We do not have the same loose lending standards.
3. People are not using their homes as piggy banks leading to little or no equity.
4. People are not over leveraging themselves.
5. Today, over half of homeowners in America have 50% or more equity in their homes.
6. And the biggest difference of all is that the government created the lockdown (and therefore the resulting economic impact) intentionally to protect our health. Housing did not lead us into this crisis.
According to a US Housing Industry consultant, John Burns, “Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices).”
More signs of hope include a 12 percent uptick two weeks ago in mortgage applications for home purchases, reversing a month of plummeting activity due to the pandemic. Housing experts say it could mark a sign that home buyers are returning.
Amy Paternite Homes is a top producing real estate team at Coldwell Banker in Maplewood. For 14 years we’ve been helping people buy and sell homes in Maplewood & South Orange and the surrounding towns. Amy Paternite can be reached at 917.442.5130 Cell, 973.378.2284 Office, or firstname.lastname@example.org.
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