Almost daily, we are questioned about the health of our local housing market. Specifically, are we at the peak of a housing bubble, and is it about to burst. Many of these questions are from homeowners and REALTORS alike that remember the housing bubble/crash of 2008-2010.
We are watching the economy’s health and the local real estate statistics, and we confidently believe that we will NOT see a repeat of the housing crash we saw in the early 2000s.
Different Mortgage Environment
When we answer this question about the housing bubble, the first thing we talk about is that we are in a completely different place than we were in 2008. The fuel of that housing crash was the number of sub-prime loans handed out. If you could fog a mirror back then, you could get a loan. It was the easiest time in history to qualify for a mortgage. Remember, the federal government had to step in and bail out Fannie Mae and Freddie Mac. The housing crash then brought some pretty hefty changes to the mortgage industry in qualifying for a loan. You almost have to sign over your firstborn the guidelines are so tight! If you have applied for one in the past ten years, you know exactly what we are talking about.
The second part of the answer to the housing bubble question is that while we have seen a healthy increase in housing prices, we have not experienced the gross inflation that other markets have seen. Even our neighbors in New Orleans have seen more significant inflation in pricing than we have. Our position will fare well for us when we do eventually see a cooling of the market. Sometimes it pays to be last on the list and this is one of those times.
Everyone needs a home
The third part of this answer that we do not feel like we will see a housing bubble is that we still have many buyers trying to purchase a new home. We believe that that number will decrease as we experience the higher mortgage rates, but the demand will still be there as a whole. People will still need homes even when things get tight.
No need to panic! Our prediction is while we will not see a housing bubble/crash, we anticipate a slight cooling-off period later in 2022. Cooling off or correction period, if you will. These are historical and set us up for room to grow in the future. Keep your eyes forward but use that peripheral vision for any changes you see sneaking up on the side. We will do the same!
If you have questions we didn’t answer here, feel free to contact us, and we will do our best to help!