Like you, we have questions about what is happening.
But instead of focusing on what we don’t know, we continue to research and pay attention to statistics and market data.
We’ve gathered information from top economists, so that whether you are buying, selling, or staying put in 2020, you’ll have what you need to make informed decisions.
A Look Back
Looking back at the last 5 recessions, only one recession had a significant negative impact on the housing market. In 2008, the mortgage crisis caused the recession, which explains why home prices dropped so dramatically. You can see in 1980, 1981 and 2001, home prices actually increased, while in 1991, there was a small decrease of 1.9%
“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be posed to bring us out of it,” said Mark Fleming, Chief Economist at First American.
Leading up to 2020
The six years leading up to the housing crash, home values increased drastically year to year. In the past six years leading up to 2020, home appreciation has been slower and steadier.
In addition home appreciation being more stable, we can also see that the requirements to obtain a mortgage loan have remained pretty consistent for the past 10 years. Mortgage lenders continue to ensure that people applying for loans will be well equipped to meet monthly payments, which was not the case leading up to 2008.
Due in part to mortgage lenders keeping homeowners on track with realistic financial duties, and in part to buyers being more informed, homeowners today are sitting on tremendous equity. Over 50% of all homeowners have at least 50% equity, with 37% owning homes ‘free and clear.’ This means that many people do not have to sell to get out from a hefty mortgage payment. With this much equity, homeowners can wait until the most opportune time for them to sell.
Do you have additional questions?