The media has presented that the Real Estate market is heading for a "Crash" in 2019!!!   We have had a very strong market since that last crash that we experienced 10 years ago.  And our market is California for real estate runs in 7-10 year cycles.  So are we due for a change?  In the last 6 months in the Sacramento region we have seen price increases level off.  But we are are not in the same position that we were in 10 years ago.  Here are four reasons why today’s market is much different than the Real Estate market of 10 years ago.

1. Foreclosures- There are significantly less  foreclosures today in the market.

We are ending 2018 with foreclosures at historic pre-crash numbers – much fewer foreclosures than we ended 2006 with. A major challenge in 2006 was the number of foreclosures. There will always be foreclosures, but they spiked by over 100% prior to the crash in 2016.  The Foreclosures sold at a discount and, in many cases, lowered the values of adjacent homes. 4 Quick Reasons NOT to Fear a Housing Crash | Simplifying The Market

2. Equity- Most homeowners have built tremendous equity in their currenthomes

Ten years ago, many homeowners irrationally converted much, if not all, of their equity into cash with a cash-out refinance.  They expected the market to continue to rise. When foreclosures rose and prices fell, they found themselves in a negative equity situation.   Then their homes  where their homes were worth less than their mortgage amounts.  They were "upside down" on their mortgages.  Many people justed just walked away from their houses.  This action led to even more foreclosures entering the market. Today is different. Over forty-eight percent of homeowners have at least 50% equity in their homes and they are not extracting their equity at the same rates they did in 2006. 4 Quick Reasons NOT to Fear a Housing Crash | Simplifying The Market

3. Lending standards

One of the causes of the crash ten years ago was that lending standards were almost non-existent.  If you could "fog a mirror", you could borrow up to $1 million dollars.  This statement IS NOT an exaggeration.  Many of the loanes required NO income or asset verification!!!  Did people lie on the application? YES!!!  These type of loans are no longer available.  You can borrow the money to buy a house, but you have to prove you have the ability to pay the loan back! 4 Quick Reasons NOT to Fear a Housing Crash | Simplifying The Market

4.  Home Affordability is better now than in 2006

Compared to 1985-2000, data shows that given our current income, more american families can afford to buy a home.   For these families,  purchasing a home requires a smaller percentage of your income today compared to 2006. 4 Quick Reasons NOT to Fear a Housing Crash | Simplifying The Market

Bottom Line

In 2019, if you are a home seller, you will still be able to get the home SOLD!!  If you are looking to make a purchase, mortgage interest rates are still at a historic low! If you have any questions on the Real Estate market, call/text Frank at 916-257-0893 or email frank@frankvalente.com