Mortgage Monday, Is the Market about to POP?
Is the Market about to POP like in 2008? This is a question I am asked all the time from real estate agents, buyers, seller and investors. In my personal opinion (yes, we all have an opinion) The signs are not showing that we are going to POP!
Let’s first talk about 2008, the Great Recession, Homeowners did not have very much equity in the home they owned, the loans they used were Option Arms and a lot of loan officers did not explain how they work, we had a LOT OF NEW CONSTRUCTION that was already build and waiting to be sol, unemployment was going up, people were losing jobs. Option Arm Loans were coming DUE and adjusting up in interest rates and payment because people were only paying the interest portion of the loan and not paying on the principal of the ballance.
The BIG Challenge in 2008 to 2013 was the 3 year, 5 year and soon the 7 year option arms were about to come due and people received notices that their mortgages were about to go up by $100’s and some people $1,000’s in monthly payments. Unfortunately, people could not afford that so they started to sell homes below market values (the start of the Short sales). By 2010 we were selling homes at 65% of what the were purchased for in 2004-2006. By 2013 we were selling homes at 50% or less that what they were worth in 2006. It was a very sad day and hinesight showed us that it was the perfect storm……
Today 2021, Here is what we know:
- 33% of Americans have more than 50% Equity in their homes.
- Loans have been redesigned (about 2013) to remove predatory loans from the market.
- Builders are not sitting on the Homes that are built and not sold, in fact they are mainly taking reservations for homes.
- Unemployment is now down to about 6%, down from 13%.
- Because interest rates are so low it’s more affordable to own a home than rent.
- We have less than 0.4 Months worth of homes to sell in SW Washington (I have never seen it this low).
- We have less than 0.8 months worth of homes to sell in Portland OR Metro (I have never seen it this low).
- Home values are up 15+% in SW Washington and 14%+ in PDX Metro (February 2020 vs February 2021).
- Eviction Moratorium ends in June 2021 in both WA and OR (has been extended multiple time) and we are expecting to have a flux of Foreclosure or Bankruptcy in July Aug September.
- And I just heard that the US government is working on delaying any foreclosure until December 2021 (not sure about the details but this will change what I am projecting).
- IN MY OPINION…………………..
- We will see a wave of houses hitting the market due to foreclosures from forbarrance and investors not able to pay their mortgage on their rental properties (this could start July, August or September).
- We will see rents RAISE like crazy, because people will be evicted and with less rentals prices go up.
- We will see interest rates rise (already are as I write this).
- We will see house values slow down and possibly flatten out! (now is the time to sell).
- I do not see the market crashing as some may say.
I see the market shifting again and again, this is nothing new in real estate, we see this all the time, I am going to suggest that if you think you want to sell then sell NOW (call me 360.609.0266) and let’s talk about that! Just enter you address and I can create a market report for you and your house to show you what your current value is, so that you can make the best choice for you.