Despite times of crazy inflation, rumors and stories about the real estate market remain a dime a dozen. Things are ever shifting and many find themselves guarded in what they feel are “uncertain” times but the face of the matter is that EVERY market presents it’s challenges and EVERY market presents its opportunities – something I am always happy to help you find!
In order to have a clear heading, it helps to discern between what’s really going on and what’s just here-say. Let’s break down a few of the most common myths in the market right now.
Myth 1: Home Prices Are Going To Fall
With the rapid increase in home prices, many have expected a sort of pendulum effect, anticipating that prices would fall and those appreciations would be lost. Understanding a few key industry terms is important here.
Appreciation, or an increase in home prices.
Depreciation, or a decrease in home prices.
And Deceleration, which is an increase in home prices, but at a slower pace.
Experts aren’t calling for a decrease in prices but instead are forecasting deceleration with continued appreciation. This means home prices will continue to increase but at a slower (and more practical) pace than what was seen over the last couple years.
“. . . higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”Selma Hepp, Deputy Chief Economist at CoreLogic
Myth 2: The Housing Market Is in a Correction
On the other side of such a hard and heavy shift, many believe the market is in a correction. Again, this is not substantiated by the current data. According to Forbes:
“A correction is a sustained decline in the value of a market index or the price of an individual asset. A correction is generally agreed to be a 10% to 20% drop in value from a recent peak.”Miranda Marquit, Forbes Advisor. “What Is A Market Correction?”
As we just hit on, home prices are still appreciating, something experts anticipate to continue albeit it at a slower pace. This is not a correction so much as a needed stabilization understanding the previous spike in increases was simply not sustainable. This is really a good thing for buyers and sellers both better ensuring a good return on the sale of a home and a solid investment in purchasing the next.
Myth 3: The Housing Market Is Going To Crash
If there’s anything hurting the market right now, it’s people abstaining from the market for fears about the market. While a number of factors come into play in the grander scheme of economics, we have to appreciate how much of it is actually due to people responding out of fear rather than facts – and missing a lot of great opportunities because of it.
Click-bait, fear-food headlines along with people who have very little actual involvement in the market, keep promoting the worry that the housing market is a bubble ready to burst. That is not the consensus among the most seasoned and experienced experts of our industry. Many people accepting this myth are doing so as memories of 2008 come to mind but it has to be understood that a very big factor in all of that related to the lending standards then applied but which have since changed.
“As recession talk becomes more prevalent, some people are concerned that mortgage credit lending will get much tighter. This typically happens in a recession, however, the notion that credit lending in America will collapse as it did from 2005 to 2008 couldn’t be more incorrect, as we haven’t had a credit boom in the period between 2008-2022.”Logan Mohtashami, Lead Analyst for HousingWire. “Will mortgage lending get tighter in the next recession?”
During the last housing bubble, mortgages were much easier to secure than what we see today. In response to the pitfalls that induced what we saw, lending standards have tightened significantly dictating that purchasers who’ve acquired mortgages over the last decade are far more qualified than they were in the years that preceded and led to the crash.
No matter what you’re hearing about the housing market, trust the experts and partner with a local real estate professional. When you do, you’ll have a knowledgeable authority on your side that knows the ins and outs of the market, including current trends, historical context, and so much more.
Whatever you’re hearing about the market, don’t make decisions on your own future on the stories, rumors or headlines. Make sure you engage the expertise of an agent actually working in the market who can not just give you the facts but empower you with industry knowledge. Working with someone who has a pulse on the market is key to getting your best results.
I’d love to be that champion in your corner. If you have any questions, concerns or just want to get some clarity on what you’ve been hearing, don’t hesitate to call/text me at 717-874-9787.
Hope to talk to you soon!