During 2008 the housing market was crashed and it was after this, we experienced the great recession. This having sent a great shock through the entire financial system, while scaling up the professed credit threat all through the economy; it is the right time for you to be prepared for the next housing bubble. Remember, the earlier crash caused homes to lose up to half their value which left a severe impact.
Paying more than the home’s worth was one of the worst things and after all who wants to pay on a mortgage that’s larger than what the home could sell for? Although some were ready to do that, some took the option of short sales while others simply faced foreclosure. To predict this real estate bubble is easier said than done, but don’t fret, this piece of writing is going to let you know about the signs that your real estate market is a bubble and with these signs you can be prepared to face it.
Before 2008 downturn, credit was easy to get, this steered people to get mortgages, but today the situation is quite different. With tighter credit systems, there are approximately thumbs down no-down-payment loans because there were in the early 2000s; failure to pay at incredibly high rates. Nevertheless, there exists a Federal Housing Administration (FHA) loan which features low down payments, low closing costs, easy credit qualifying and much more. If truth be told, these are the very features that are alarming. However, remember that the FHA has been making loans to people who do not meet the requirements for a conventional mortgage since 1934. This is very much alarming!
Mortgage rates are a great indicator when observed profoundly, mortgage rates were 18 percent during 1982 and from 2002 to 2005 it was 6 percent, this having enticed people to take out mortgage loans , now we are seeing historic lows. If the rate increases, we might see housing demand and housing prices fall.
You will be thinking that your market is or isn’t in a bubble, this is a very wrong notion. As with real estate bubble, the problem is that we don’t know them when we see them. A rapid price appreciation or depreciation doesn’t mean that you are going to face a bubble, seeing that it is an unsustainable rapid price appreciation, in either case, it can go anyway.
With all that said, the aforesaid points are subjective to change depending on the current state of affairs. Hence, not being lethargic is the best attitude in real estate and it will help to survive any downturn like the bubble. Hope you found this article to be helpful, if you want to become a successful realtor, then it is a must to stay updated on real estate key concepts. Zack Childress is a real estateentrepreneur who elucidates courses on real estate principles, markets, and finance. His practical reviews about the most intricate real estate concepts will definitely help any aspiring realtor to stamp his/her print in the field. Connect with zack Childress and explore more.