In the past few months, you may have heard whisperings about an incoming housing market crash. We’re here to put you at ease: we are not headed towards a crash!
A lot of this concern comes from average home prices slowing in growth across the country. We wrote a blog about it last week, but this is not a bad thing! It just means the market is shifting back towards normal.
The Three Most Important Factors
Today’s market is wildly different than the pre-crash housing market of the late 2000s. We’re going to show you why and how using three important metrics that measure the Raleigh real estate market.
Home Prices
Beginning in 2008, average home prices in the U.S. dropped almost 29% over a four year period. That’s drastic, and it’s what spurred the housing market crash!
Today’s average home prices are not depreciating. It’s just that the level of appreciation is slowing down. Over the last year, homes have increased by more than 4%.
While this is less than the 6-7% prices appreciated over years prior, it in no way indicates that we’re headed towards a crash!
Mortgage Standards
In the current real estate market, it’s considered easier to get a loan from the bank than in years prior. Many are concerned that these “lenient standards” will contribute to a housing crash.
However, the Urban Institute’s Housing Finance Policy Center released a quarterly index that details the percentage of home purchase loans that are likely to default. When this rate is very low, it indicates that lenders are unwilling to tolerate defaults. This makes it much harder to get a loan.
When that percentage is higher, it indicates that lenders are more lenient so it is easier to get a loan.
In another report called the Housing Credit Availability Index, the Urban Institute also revealed that there is still ample space to expand the housing market credit box. Even if the current risk of default was twice what it currently is, it would still be well within the pre-crisis standard of 12.5%.
Foreclosure Rates
In the last 10 years, foreclosures and short sales have made up 35% of all home sales. That’s huge!
At the end of the fourth quarter of 2018, the percentage of loans in the foreclosure process was just 0.95%. It hasn’t been that low since 1996!
Ready to Explore the Raleigh Real Estate Market?
Linda Craft & Team REALTORS® is ready to help. Give us a call today to learn more about the best way to buy a home in the greater Raleigh market.
Rely on our expertise, our extensive resources, and our proven track record with buying homes in Raleigh. We’ll guide you towards a successful outcome in the Triangle, guaranteed.