58% of Homeowners See a Drop in Home Values Coming
58% of Homeowners See a Drop in Home Values Coming
According to the recently released Modern Homebuyer Survey from ValueInsured, 58 percent of homeowners think there will be a “housing bubble and price correction” within the next 2 years.
After what transpired just ten years ago, we can understand the concern Americans have about the current increase in home prices. However, this market has very little in common with what happened last decade.
The two major causes of the housing crash were:
- A vast oversupply of housing inventory caused by home builders building at a pace that far exceeded historical norms.
- Lending standards that were so relaxed that unqualified buyers could easily obtain financing thus enabling them to purchase a home.
Today, new construction in Jersey City and all along the Gold Coast of New Jersey is reaching a feverish pace. Obtaining massively over-leveraged financing via various government programs like the FHA program is anything but difficult given the current mortgage environment. All you have to do is apply for a loan with your local community bank or credit union to see just how easy it is to obtain financing these days. The elements that precipitated the housing crash a decade ago continue to exist in today’s real estate market.
Bottom Line
If you currently own a home and are thinking of moving-up to the home your family dreams about, don’t let the fear of another housing bubble get in the way as this housing market in no way resembles the market of a decade ago. Unlike 2008, there is very little private capital that would be at risk if there's another subprime mortgage bust.
There is no way to completely mitigate risk but it certainly helps to understand it. When faced with the question of whether or not there will be another crash in the Real Estate market in the near future, ask yourself if this time is truly any different than last time...
Written by Brandon Lor