Well, that’s an emphatic NO! First of all because we were never in a bubble to begin with and second because the market hasn’t burst, it’s just finally settling itself down a bit.
You gotta know that the frantic real estate market of the past two years could not have sustained itself forever. Recent rate hikes by the Federal Reserve have spiked mortgage rates, negatively impacting buying power and affordability. The attempt to control rising inflation has also put the brakes on the real estate market. What it has not done, however, is to push it over a cliff.
I’ve had a lot of people ask me about where the market is headed, and if we could experience the dive of 2007 all over again. That is also an emphatic NO. Here’s why…
When the market crashed 15 years ago, sales dropped 50%. Current sales have only dropped 15%. Prices fell 30% and current prices are rising, they’re just not rising as fast as they were. Back then there were 45,000 homes for sale in the region, versus only 9,000 now. Unemployment was at 10% at the peak, currently it’s at 3.6%. Currently, only 2% of homes have negative equity, versus a whopping 25% then. And the financial industry has whipped itself into shape by instituting sound lending practices, whereas you only had to fog a mirror to get a loan previously.
All markets are cyclical, and the real estate market is no different. Look for increased inventory levels and a tempering of the rate of price appreciation. Buying or selling a home is a BIG DEAL – for heaven’s sake, be sure you’re working with an agent that knows the local market and has the experience to guide you through one of the most important decisions of your life. Call me at 215-813-6655 and let’s see how to make this market work for you!
PHOTO CAP: Lynne Kelleher