People are asking if 2018 will be another 2008 for the real estate market. I emphatically answer NO! Here is why I don’t believe we’re headed for a major turn in the market.
There are many more protections for buyers/homeowners in the mortgage market. A large part of the 2008 crash was related to mortgages being given to people who could not afford those homes. The Dodd–Frank Wall Street Reform and Consumer Protection Act which was signed into law by President Obama in 2010. The Consumer Financial Protection Bureau instituted a rule that protects consumers from irresponsible mortgage lending by requiring lenders to ensure prospective buyers have the ability to repay their mortgage.
Additionally, housing starts are significantly below the need for 1.5 million units per year (top chart below). 2007 was the last year we met that goal. On the other hand, the homeownership rate is rebounding and is at its highest rate in three years (bottom chart below). These two statistics combined tell us that demand continues to outweigh supply. Our market will remain strong as long as we have the demand.
We are, however, seeing an adjustment in the market, please see last week’s post for that update.
For more information on the market or on buying or selling a home, please give me a call at 206-790-0081 or email Jamie@JamieFlaxman.com.