Are we on the all-new crazy train, destined to crash off the cliff in a pile of short sales and foreclosures? Are distressed sales headed to your market? Is the bubble bursting?<\/p>\n\n\n\n
Do you feel confused and stressed yet? Us too. So let\u2019s drill down on what\u2019s actually happening, what it means, and what you should do.<\/p>\n\n\n\n
Inventory is rising<\/strong>. The headlines say that the influx of active listings<\/a> will drive prices down, reduce the velocity of sales and, consequently, wreck the market. This is indeed a logical argument since it was a major factor driving the housing crash of 2008-2009. Too much supply and not enough demand turned the tables from boom to bust back then.<\/p>\n\n\n\n It\u2019s true that inventory has increased<\/a> from an all-time low of 900,000 active listings in February 2022, up to 1.2 million listings currently. That\u2019s an increase of 35.6% so far this year.<\/p>\n\n\n\n What does that really mean? Consider the fact that active listings peaked at 3.9 million in 2006. We have 2.6 million fewer than that peak. This time is not just like last time<\/strong>. It\u2019s very unlikely that we will all wake up to a sudden increase of 2.6 million listings.<\/p>\n\n\n\n Builders have slowed their production<\/strong>, and already taken drastic measures to sell off existing inventory. The bottom line, they won\u2019t be flooding the market with new construction.<\/p>\n\n\n\n Inventory increased last time<\/strong> largely due to factors that are not present in today\u2019s market Adjustable rate mortgages caused homeowners to no longer afford payments and not be able to refinance out of that situation. Just under 10% of existing mortgages<\/a> are adjustable, and more than 50% of homeowners don’t even have a mortgage at all. In 2008, 80% of mortgage loans were adjustable. Some 50% of homeowners who have mortgages enjoy more than 50% equity.<\/p>\n\n\n\n Unemployment peaked in October 2009 at 10%. <\/strong>If you didn’t have a job, you weren’t going to be making your payments. The current unemployment rate in the U.S. is 3.5%. This is the lowest figure in 50 years. The number of unemployed persons declined by 261,000 to 5.75 million in September, while the number of employed increased by 204 thousand to 158.9 million.<\/p>\n\n\n\n In the Great Recession, homeowners owed more than homes were worth, with no equity, and more likely, negative equity<\/em>. <\/strong>Builders had overbuilt oceans of unsold homes, condo high rises, and subdivisions.<\/p>\n\n\n\n You could rent a home in your same neighborhood for a smaller monthly payment than you were paying on your mortgage. <\/strong>In most areas of the country, you can\u2019t do that now.<\/p>\n\n\n\n The whole world has already refinanced their mortgages down to 3% or less in most cases, with 30-year fixed terms<\/strong>. If you don’t have to move and pay 7% or more, then why would you?<\/p>\n\n\n\n Thanks largely to COVID-19, many would-be sellers turned their homes into vacation rentals. <\/strong>Others may keep their homes and turn them into traditional yearly rentals, versus listing and selling them as they would have back in the actual housing crash.<\/p>\n\n\n\n Finally, consider the fact that while inventory has risen dramatically this year, it’s still lower than the inventory levels of 2018, 2019, and 2020.<\/p>\n\n\n\n Knowledge equals confidence. Ignorance equals fear. Be the leader in this changing market and you\u2019ll thrive, but you must be proactive. Each day, you are self-employed or self-unemployed, depending on how many people you find who need your help buying or selling real estate.<\/p>\n\n\n\n Tim and Julie Harris<\/a> host a podcast for Realtors called Real Estate Coaching Radio<\/a>. They\u2019ve been professional real estate coaches for more than 20 years, helping agents succeed in many different market conditions.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Do you feel confused and stressed yet? Us too. So let\u2019s drill down on what\u2019s actually happening, what it means, and what you should do.<\/p>\n","protected":false},"author":15802,"featured_media":4822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3255],"tags":[],"coauthors":[2825],"class_list":["post-3593","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-archive"],"acf":[],"yoast_head":"\nWhy? Here are 8 reasons you won’t have inventory-armageddon any time soon:<\/h3>\n\n\n\n
What should you do about this?<\/h4>\n\n\n\n
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