This is a question many realtors and loan officers are hearing lately. The housing market has been crazy for the last year, home prices going up, inventory is very low and buyer demand is huge. But that doesn’t mean we are facing the same situation as 2008. The conditions are very different. Today’s housing market is much more stable than 2008.
Here are some reasons why mortgage experts aren’t as concerned about a housing crash in 2022. The number one reason is the lending standards are much stricter than they were in the early 2000’s. It was very easy to get a mortgage in the early 2000’s. Now there are stricter credit requirements, more regulatory safeguards and lenders are better at evaluating a borrower’s ability to repay the mortgage.
Loan products are more stable than they used to be. A 30 year fixed rate mortgage is the most common mortgage used -either FHA or conventional. In the early 2000’s, there were many adjustable rate mortgages and some that you didn’t really need to qualify for – many loans were done without income verification based on credit and loan types.
Homeowners have more equity in their homes. Back in 2008, homeowners were allowed to put very little down – maybe zero down. Now most have to put at least 3% down, but many are putting more than that down. So even if home values drop a little, most homeowners still have a fair amount of equity in their homes.
Job losses should not be a factor next year. We have had job losses during the covid pandemic, but many were in service industries. There are many people hiring so job loss should not be a factor.
There are many options for forbearance. If a homeowner is struggling, mortgage companies are working with you through government programs to help you stay in your home.
So if you are concerned about home values and thinking about holding off on a home purchase, you may be costing yourself money. Home prices are expected to continue to increase, maybe not as much as they did this year, but still increase. Mortgage interest rates are expected to increase and have been slowly increasing this past month. Interest rates are up about .25%. As interest rates continue to increase, it will cost you more to purchase your home and you may not qualify for as much next year as you would this year.
For those thinking about buying a home, it’s a great time to talk to a realtor and loan officer and figure out what you can qualify for now. This is one time where waiting could cost you more money.