3 Reasons Why We Are NOT Heading Toward Another Housing Crisis

By
Real Estate Agent with www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 228209

3 Reasons Why We Are NOT Heading Toward Another Housing Crisis

 

Let's examine the reasons we are NOT heading towards another recession/housing crisis.

 

Why?Almost daily, I receive a call, text, email or Facebook or LinkedIn private message - "What is going on with the market? Are we headed towards another crash?" or "Is another recession in our near future?" or something akin to those questions. I can't tell you how many people I have reminded NOT to listen to the 'talking heads!' Seriously, that's all they are - they are speaking in general terms without any relevant data to back up their theories. 

 

It's very frustrating to an industry that is accustomed to combating the negatives, normally; we don't need the help of the media or other 'talking heads' who truly have no clue just how local our industry really is.

 

With home prices softening a bit, I can understand, to some degree, that there may be a concern that we may be headed 'toward the next housing crash.' However, we are in a TOTALLY different market than we were during the bubble market we were in, twelve years ago.

 

Talking Heads

 

Here are the three key metrics that will explain why we are NOT heading toward another housing crisis:

 

1.  HOME PRICES

 

A decade ago, home prices depreciated dramatically, losing about 29% of their value over a four-year period (2008-2012). Today, prices are not depreciating, rather the level of appreciation is simply decelerating.

 

Home values are no longer appreciating annually at a rate of 6-7%. However, home values have still increased by more than 4% over the last year. Of the 100 experts reached for the latest Home Price Expectation Survey94 said home values will continue to appreciate through 2019. It will just occur at a slower & lower rate. This is great news for home buyers who are nearing being priced out of the market. 

In fact, many Charlotte home buyers have already been priced out of the market and many more would be if the rate of appreciating continued at the fast pace it was over the past 3-4 years. A correction perhaps? I believe so but, it's a necessary shift to help neutralize the market.

 

2.  MORTGAGE STANDARDS

Many are concerned that lending institutions are again easing standards to a level that helped create the last housing bubble. However, there is absolutely NO proof that today’s standards are anywhere near as lenient as they were during the period leading up to the crash.

 

The Urban Institute’s Housing Finance Policy Center issues a quarterly index, measuring the percentage of home loans that are likely to default. Last month, their January Housing Credit Availability Index revealed:

 

“If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

 

3.  FORECLOSURE INVENTORY

During the last decade, distressed properties (foreclosures and short sales) made up 35% of all national home sales. The Mortgage Bankers’ Association reported last week, that we currently have the lowest level of foreclosures in process since 1996 - less than 1%. That, to me, speaks the strongest to the point, we are nowhere near a recession.

 

Real estate statistics/data is hyper-local. It always has been and will continue to be. Consult a local Realtor® for the local facts.

 

Bottom Line

After using the three key housing metrics to compare today’s market to that of the last decade, it becomes crystal clear that the two markets are simply nothing alike. Again, we are likely in the midst of a much-needed market correction, taking real estate to a more neutral market than the sellers' market we have been experiencing since 2013.

 

© Debe Maxwell | The Maxwell House Group | RE/MAX Executive | CharlotteBroker@icloud.com | 3 Reasons Why We Are NOT Heading Toward Another Housing Crisis

*Data above provided by Keeping Current Matters

Originally posted at https://www.icharlotterealestate.com/3-reasons-we-are-not-heading-towards-another-housing-crash/

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Ron Barnes 02/22/2019 06:31 AM
Topic:
Real Estate Market Trends
Location:
North Carolina Mecklenburg County Charlotte
Groups:
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Market Updates
Charlotte North Carolina Area
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Rainmaker
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Congratulations, Debe, on your feature recognition.

This is important information to share with home owners and prospective home buyers.

Feb 23, 2019 11:47 AM #60
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Debe I agree with your conclusion.  Those of us who were in the business through the rise of the housing market in the early 2000's and the collapse that followed in the tail end of the 2000's, will attest that that housing market and the present housing market are nothing alike.

Feb 23, 2019 02:29 PM #61
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Paul S. Henderson, REALTOR®, CRS
RE/MAX Northwest. - Tacoma, WA
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This is a great essay covering the talking points very well Debe. Thank you for sharing...

Feb 23, 2019 04:01 PM #62
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Wanda Kubat-Nerdin - Wanda Can!
Prado Real Estate South - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

Great points Debe, glad to see this post featured! There are still affordable homes for sale in my market, with plenty of inventory, though I am seeing more price reductions. Three recent short sales does not contribute to a 'sky is falling' scenario! 

Feb 24, 2019 07:33 AM #63
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

You are so right, Mike McCann - Nebraska Farm Land Broker! If it's not focused locally, on local data, it's highly inaccurate. 

Feb 24, 2019 07:53 AM #64
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Well, you know I agree with the talking heads comment, Jeff Dowler, CRS and isn't it funny how we have programmed ourselves to utilize a much stronger filter than in decades-past? You know what they say opinions are like... 

Feb 24, 2019 07:55 AM #65
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Yes, as my graphic demonstrates, avoiding those talking heads is the message I really wanted to convey, Jim Holder - as well as we are still in a strong sellers' market here - certainly nothing that would indicate a recession. 

We follow the stock market as well and thought a few weeks ago that we were on our way, finally, to a correction. We were incorrect in that prediction, weren't we?! 

This market needs a correction and we need to get closer to a more neutral market.

Feb 24, 2019 07:59 AM #66
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
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Thank you, Roy Kelley! It's a topic that needs a bigger platform - so the 'truth' can be shared, for sure!

Happy Sunday! 

Feb 24, 2019 08:02 AM #67
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
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They may seem that way to those on the outside, looking in but, the main culprit of the collapse is no longer in play...as you well know, George Souto!

Feb 24, 2019 08:03 AM #68
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
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And, thank you for stopping by, Paul S. Henderson, REALTOR®, CRS! I hope you're having a wonderful Sunday!

Feb 24, 2019 08:04 AM #69
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

You know, I follow our market pretty closely too, Wanda Kubat-Nerdin - Wanda Can! I noticed that price reductions were happening more and more frequently here too. My theory - the neighbors sold their house at an outrageously high price and the sellers want to push theirs even higher. "If they can sell at $400K two months ago, I can sell at $450K!"

I think it's a combination of over-zealous sellers and buyers not willing (or simply not able) to over-pay like they have in recent years. 

You're so right - there's no Chicken Little scenario here - nothing remarkable to see! Move on, right?! 

Feb 24, 2019 08:09 AM #70
Rainmaker
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Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Great post Debe Maxwell, CRS ... well deserved Feature.  All 3 points are substantiated.

I will definitely be using the foreclosure data when assuring clients about the market.

Don't listen to the Talking Heads ... instead Talk to Your REALTOR who has the FACTS.

 

Feb 24, 2019 09:33 AM #71
Rainmaker
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Julie A. Black
KAUAI DREAMS REALTY Kauai Real Property Specialist - Kapaa, HI
CLHMS, CRS, GRI, Realtor, Broker

This is a great explaination. I posted to my business Facebook Page.

Feb 24, 2019 01:57 PM #72
Rainer
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Robin Wells
RAW Chimney Sweep and Inspections - Penetanguishene, ON
Giving Peace Of Mind One Chimney At A Time

Good points.  And while it may vary from area to area I do like the optimism.  There are a lot of moving pieces in the whole picture and it is a hard one to judge for anything but the near future, but lets hope it continues.

Feb 24, 2019 05:58 PM #73
Rainmaker
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Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

Thanks for bringing it back to data, Debe Maxwell, CRS .  We're seeing time on market increase in DC, but that's nothing like 2008!

Feb 25, 2019 08:41 AM #74
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
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I love it, Diana Dahlberg - "Don't listen to the Talking Heads ... instead Talk to Your REALTOR who has the FACTS."

We need to get our lighterside guy to create a meme with this! ;-)

Feb 25, 2019 11:10 AM #75
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Well, I'm honored, Julie A. Black! Thank you for sharing that - it's good for us to get the word out, for sure!

Feb 25, 2019 11:11 AM #76
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Yes, I agree, Robin Wells! The one different puzzle piece in 2019 is the lending/financial climate. Things have been drastically changed since The Great Recession.

Feb 25, 2019 11:12 AM #77
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Same here, Lise Howe and those properties that are priced right - for today's market - are still selling quickly. Sellers sometimes have delusions of grandeur when pricing these days!!

Feb 25, 2019 11:13 AM #78
Rainmaker
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Ricardo Mello
Manhattan Miami Real Estate - Manhattan, NY
Manhattan & Miami Real Estate Agent

Excellent points Debe...;)

Mar 24, 2019 04:36 PM #79
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