If you’re looking to enter the buying market in early 2019, you’ve most likely already started your housing plan. That means you’ve been paying attention to the increases in house prices in your desired areas, and you’ve most likely noticed that those increases are continuing with estimations into 2019 of higher home values and costs. But worry not, what goes up doesn’t always HAVE to come down …
If you remember the boom and bust about a decade ago, the consistent upticks in home value could potentially raise warning flags. We’re here to tell you that this is NOT 2006-2008, and 2019 offers some very reliable factors that the home value increase is a natural one, with little to no risk of bust on the horizon.
Foreclosures have Decreased
The foreclosure numbers in 2006 were sizeable, and they added a layer to the home buyer’s risk factor at the time. Back then, foreclosures spiked 100% before the bottom dropped out, with homes selling at discounts which lowered neighboring homes’ values.
Heading out of 2018, we are seeing historic lows for foreclosures; significantly lower than 2006, specifically, there were 541,540 foreclosures in 2006 and only 216,380 this year. This means a significantly lowered risk of decreased home values due to the adjacent homes selling at lower rates due to foreclosure.
Equity Has Grown
Many homeowners at the time of the 2008 crash were “under water” with their homes – they owed more than the property was worth. Today, according to recent data from Freddie Mac, over 48% of homeowners have over 50% equity in their homes. This stabilizes the buyer/seller relationship to even the playing field.
Stricter Lending Practices Create a Stable Market
One of the key causes of the problems in 2008 were exceptionally lax lending practices. The flurry of new homes available for sale due to the spike in home values, buyers entering the market en masse and the ability for people to get loans who did not truly qualify by normal standards, and often defaulted on the loans, adding to the problem of foreclosures.
It was a snowball effect and could have been curtailed with stricter home loan guidelines. Today, we have the “standard” rules back in place, allowing those with the right criteria to apply for and obtain a mortgage loan at rates they can afford long-term. The environment is ripe for new homeownership, thanks to the rules being back in place.
Take a look at your local housing market if you want to see the proof for the above points. It is safe to buy a home in today’s market, despite the increasing home value. But that same fact means that acting now saves you money later. Are you ready?