Fears vs Realities: 3️ Reasons Why This Housing Market Wouldn't Be The Same As 2008

Today's homebuyers are a little wary, and it's understandable why. The ever-increasing mortgage rates, home prices at all-time highs, a housing bubble burst, and uncertain market conditions to name a few. There are lots of concerns over the past couple of years regarding the imminent crash similar to 2008 recession, but this year, they’re really being manifested. Despite these fears, however, many experts believe that these won’t be the same as 2008 recession and here are the reasons why:

FEAR #1 – BEING UNABLE TO PAY MORTGAGE

After a lot of people lose their job because of the pandemic, it’s only natural to be wary of the possibility of not being able to pay your mortgage. Years prior to the 2008 recession, mortgage lenders were far less picky about who they would lend to. This meant that when financial hardship struck and borrowers lost their jobs, they were unable to pay their mortgages and, regrettably, were forced to go into default, losing their homes in the process.

REALITY:

Mortgage approval has recently been stricter and lenders aren’t loaning money to just anyone these days. To get a mortgage these days, as compared to 2008 however, you have to prove that you can actually repay that debt, even if things get tough. Nowadays, lenders carefully look into your assets, employment, income, savings, and much, much more.

FEAR #2 – BEING UNABLE TO AFFORD OF BUYING A HOME

Probably the biggest concern we hear from home buyers is related to whether or not they’ll actually be able to afford a home. The majority of the home buyer population recently just settle for renting and is now more afraid to take their first step because of the volatile market conditions and most homes are still unaffordable for them. Moreover, many are still struggling with finding a job even after finishing college, making them just give up on their dreams of having a home or just decided to wait on the sidelines until the market crashes.

REALITY:

Even though rising mortgage rates are pushing some buyers out of the market, buying a home can help you escape the cycle of rising rents, it’s a powerful wealth-building tool, and it’s typically considered a good hedge against inflation. Purchasing a home can be your safety plan because you never know when your rent is going to go up when the lease ends. When you purchase a home and take out a 30-year fixed-rate mortgage, you’ve set your housing expense for the next 30 years. You know what to expect and what you’ll need to pay to keep a roof over your head.

FEAR #3 – BEING UNABLE TO YIELD THE BENEFITS OF HOMEOWNERSHIP

Buying a home can be an exhaustive affair in terms of finance. As a buyer, you will exhaust most of your finances and security by only trying to afford a home. You may even fear the possibility of not being able to yield the benefits of homeownership. Prices may depreciate due to inflation, or maybe you’ll find a better job somewhere far from your home making renting more plausible as it gives you flexibility, etc.

REALITY:

Homeownership wins in the long run. If you’re questioning whether or not to buy a home this year due to today’s cooling market, consider the long-term financial benefits of homeownership. According to Nar, the nationwide average for home appreciation is about 290% for the past 30 years. History also tells us that in four of the last six recessions, home prices actually appreciated, only falling during the early 90s and the housing crash in 2008. Mortgage rates, though, declined during each of the previous recessions. Homeownership also gives you a chance to build wealth and buy in your ideal neighborhood faster and more efficiently. When you own a home, you’ll be able to build equity which in turn can power your next move. So instead of renting and saving for the sake of flexibility, why not own and save and build wealth at the same time?

WE’RE HERE TO HELP!

When you head out to buy a home, there are a number of obstacles you’ll encounter along the way. The process includes everything from understanding your finances to going house hunting, making an offer, and more. Partnering with a real estate professional can help you have expert guidance at each step of the way.