The most popular phrase during this pandemic seems to be, “during these uncertain times…” Some may even use this phrase when referring to the housing market. While a comparison to 2008’s housing crisis is certainly reasonable, the current housing market shows positive signs that keep us optimistic and show this is not a do-over of 2008. Read on for factors in the current housing market that show things are looking up.

Home Equity and Appreciation

In the years leading up to the 2008 housing crisis, appreciation was growing at an astonishing rate. In fact, both 2006 and 2007 saw appreciation percentages grow by double digits. That level of appreciation has not been seen in the years leading up to current events. In recent times, appreciation has been steady and at reasonable levels, leading us to check this off the list of potential red flags.

With appreciation comes equity. If we look at the amount of equity tapped into before 2008, the numbers are shocking. People were using the equity in their homes to fund their lifestyle, rather than using it for necessities or home projects that would pay off down the road. The good news here is that people are still building equity, but are using it wisely or letting it multiply over the years by leaving it untapped. An example of a wise use of equity would be using funds from a cash-out refinance to remodel the high value rooms in a home and/or add features that you desire in your home that add value, if done right. 

Rates

If you haven’t heard mortgage interest rates are historically low, it’s to be assumed you must not be a large consumer of media! Everywhere you turn these days someone is touting historically low interest rates, and with good reason. These low rates are allowing people to purchase more house for their money or save money and time on their current loan with a refinance. The best news here is, that does not look like it will be changing anytime soon. 

You may be wondering why this is such a good thing and how this differs from what led up to issues in 2008. One of the largest differences here surrounds regulations and the type of mortgages that are available. Lessons were learned and investors are seemingly more cautious in the last few years, which makes this a completely different circumstance than in the past. 

Supply and Demand

In 2019 a word that best described the housing market and its inventory was “tight”. We were looking forward to a busy spring home buying season with more supply hitting the market—but with a pandemic at play—a spring market is going to look a little different. The good news is that this is not a full stop, but more like a short pause. While internet searches and new construction starts are down, the good news is that the largest demographic of future homebuyers remains firmly in the millenials’ camp and that bodes well for the market once the economy restarts.

Final Thoughts   

While it is understandable to worry about the state of the economy and make comparisons to 2008, there are so many differentiating factors that make that an unfair comparison. While the crisis we faced in 2008 was a financial one, the current stressors are health related and therefore affecting the housing and financial markets differently. The hope remains that this is a pause in our normal daily functions and we will be back up and running sooner rather than later. We are seeing positive signs all around, and the housing market is no exception. 

Cambria Mortgage is proud to be a local business built to support our community. We are here for you now and always. Call us today at 952-942-0110 to see how we can help you on your journey through homeownership.