If you’re holding out hope that the housing market is going to crash and bring home prices back down, here’s a look at what the data shows. And spoiler alert: that’s not in the cards. Instead, experts say home prices are going to keep going up.
Today’s market is very different than it was before the housing crash in 2008. Here’s why.
It’s Harder To Get a Loan Now – and That’s Actually a Good Thing
It was much easier to get a home loan during the lead-up to the 2008 housing crisis than it is today. Back then, banks had different lending standards, making it easy for just about anyone to qualify for a home loan or refinance an existing one.
Things are different today. Homebuyers face increasingly higher standards from mortgage companies. The graph below uses data from the Mortgage Bankers Association (MBA) to show this difference. The lower the number, the harder it is to get a mortgage. The higher the number, the easier it is:
The peak in the graph shows that, back then, lending standards weren’t as strict as they are now. That means lending institutions took on much greater risk in both the person and the mortgage products offered around the crash. That led to mass defaults and a flood of foreclosures coming onto the market.
There Are Far Fewer Homes for Sale Today, so Prices Won’t Crash
Because there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), that caused home prices to fall dramatically. But today, there’s an inventory shortage – not a surplus.
Today, unsold inventory sits at just a 3.0-months’ supply. That’s compared to the peak of 10.4 month’s supply back in 2008. That means there’s nowhere near enough inventory on the market for home prices to come crashing down like they did back then.
People Are Not Using Their Homes as ATMs Like They Did in the Early 2000s
Back in the lead up to the housing crash, many homeowners were borrowing against the equity in their homes to finance new cars, boats, and vacations. So, when prices started to fall, as inventory rose too high, many of those homeowners found themselves underwater.
But today, homeowners are a lot more cautious. Even though prices have skyrocketed in the past few years, homeowners aren’t tapping into their equity the way they did back then.
Black Knightreports that tappable equity (the amount of equity available for homeowners to access before hitting a maximum 80% loan-to-value ratio, or LTV) has actually reached an all-time high:
That means, as a whole, homeowners have more equity available than ever before. And that’s great. Homeowners are in a much stronger position today than in the early 2000s. That same report from Black Knight goes on to explain:
“Only 1.1% of mortgage holders (582K) ended the year underwater, down from 1.5% (807K) at this time last year.”
And since homeowners are on more solid footing today, they’ll have options to avoid foreclosure. That limits the number of distressed properties coming onto the market. And without a flood of inventory, prices won’t come tumbling down.
While you may be hoping for something that brings prices down, that’s not what the data tells us is going to happen. The most current research clearly shows that today’s market is nothing like it was last time.
No matter how you slice it, buying or selling a home is a big decision. And when you’re going through any change in your life and you need some guidance, what do you do? You get advice from people who know what they’re talking about.
Moving is no exception. You need insights from the pros to help you feel confident in your decision. Freddie Macexplains it like this:
“As you set out to find the right home for your family, be sure to select experienced, trusted professionals who will help you make informed decisions and avoid pitfalls.”
And while perfect advice isn’t possible – not even from the experts, what you can get is the very best advice out there.
The Power of Expert Advice
For example, let’s say you need an attorney. You start off by finding an expert in the type of law required for your case. Once you do, they won’t immediately tell you how the case is going to end, or how the judge or jury will rule. But what a good attorney can do is walk you through the most effective strategies based on their experience and help you put a plan together. They’ll even use their knowledge to adjust that plan as new information becomes available.
The job of a real estate agent is similar. Just like you can’t find a lawyer to give you perfect advice, you won’t find a real estate professional who can either. That’s because it’s impossible to know everything that’s going to happen throughout your transaction. Their role is to give you the best advice they can.
To do that, an agent will draw on their experience, industry knowledge, and market data. They know the latest trends, the ins and outs of the homebuying and selling processes, and what’s worked for other people in the same situation as you.
With that expertise, a real estate advisor can anticipate what could happen next and work with you to put together a solid plan. Then, they’ll guide you through the process, helping you make decisions along the way. That’s the very definition of getting the best – not perfect – advice. And that’s the power of working with a real estate advisor.
If you’re looking to buy or sell a home, you want an expert on your side to help you each step of the way. Connect with a real estate professional so you have advice you can count on.
Most real estate buyers and sellers are familiar with traditional realtors and brokers that work for a percentage-based commission. However, due to exponential growth in technology and market changes, there is a growing trend towards the alternative of a fixed price realtor, or flat fee real estate broker. In this case, a flat fee indicates an established, fixed charge paid by a client to their broker for listing and selling property. This eliminates real estate brokerage and commission charges based on a percentage of the property’s sale price.
It’s essential for those with Arizona homes for sale to understand their options, whether that means traditional commission-based realtors to sell home by owner or flat fee agents. Ideally, your experience in successfully selling your current home and finding your next one should be easy, simple, and positive—the lowest amount of stress for the highest amount of return on your investment. If you are looking to sell your Arizona home, we are here to provide straightforward information about flat fee real estate brokers as a smart and beneficial solution to your buying and selling needs.
The Impact of Technology
The real estate market, like most businesses, is adapting to rapidly evolving technology that has impacted the environment–especially in terms of sales. As a result, the real estate market is moving away from full price agents to fixed fee real estate brokerage and transactions. Buyers have instant online access to available homes, making it easy to search for listings and other information such as photos, established histories, market values, and other important details. Sellers no longer require big-name companies with high overhead and over-priced commissions to list and sell their homes in Arizona, when flat fee MLS listings are available and just as effective.
It’s a Seller’s Market
There is no doubt that Arizona real estate is currently a seller’s market. This is especially true in the Phoenix metro area as well as Tucson, Sedona, and Cottonwood. Across Arizona, property for sale has increased in value over the past 12 months, and home prices are expected to rise at a continuous pace for the foreseeable future. This is, in part, due to high demand for houses in Arizona as the number of active listings remains low. As a result, homes spend an average of just 25 days on the market, making flat fee agents a logical choice for sellers. https://azbigmedia.com/category/real-estate/
Benefits of Flat Rate Commission Real Estate
Flat rate commission real estate is the same as buying or selling a home through traditional agencies. However, with a flat fee brokerage, the transaction is done for a set price paid by the client. This eliminates paying a percentage-based commission for buying or selling a home.
With a flat fee broker, there is no need for negotiation. The flat fee allows for transparency and peace of mind since there is an upfront, established price rather than a sale’s price percentage and commission involved. In addition, clients still receive full services with their flat fee listing agent, including photographing, marketing, and showing the property as well as screening and negotiating with potential buyers and drawing up paperwork for transactions.
The Listing Pad
At The Listing Pad, we believe in dealing with and representing clients directly as owners and brokers of our family business when it comes to houses for sale in Arizona. We work for you to provide expert, attentive real estate experience for a low flat fee. www.thelistingpad.com
LET’S TALK REAL ESTATE
If you have questions about buying, selling, or just want to chat about market conditions, please reach out. We love what we do.