MY BLOG - Working For You Every Step of the Way!

head_left_image

3 Reasons This is NOT the 2008 Real Estate Market in Leisure World MD

3 Reasons This is NOT the 2008 Real Estate Market in Leisure World MD

3 Reasons This is NOT the 2008 Real Estate Market | MyKCM

No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the case in 2008. There are those who disagree and are comparing today’s real estate market to the market in 2005-2006, which preceded the crash. In many ways, however, the market is very different now. Here are three suppositions being put forward by some, and why they don’t hold up.

SUPPOSITION #1

A critical warning sign last time was the surging gap between the growth in home prices and household income. Today, home values have also outpaced wage gains. As in 2006, a lack of affordability will kill the market.

Counterpoint

The “gap” between wages and home price growth has existed since 2012. If that is a sign of a recession, why didn’t we have one sometime in the last seven years? Also, a buyer’s purchasing power is MUCH GREATER today than it was thirteen years ago. The equation to determine affordability has three elements:  home prices, wages, AND MORTGAGE INTEREST RATES. Today, the mortgage rate is about 3.5% versus 6.41% in 2006.

SUPPOSITION #2

In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in some major markets. Look at Manhattan where home prices are in a “near free-fall.”

Counterpoint

The only major market showing true depreciation is Seattle, and it looks like home values in that city are about to reverse and start appreciating again. CoreLogic is projecting home price appreciation to reaccelerate across the country over the next twelve months.

Regarding Manhattan, home prices are dropping because the city’s new “mansion tax” is sapping demand. Additionally, the new federal tax code that went into effect last year continues to impact the market, capping deductions for state and local taxes, known as SALT, at $10,000. That had the effect of making it more expensive to own homes in states like New York.

SUPPOSITION #3

Prices will crash because that is what happened during the last recession.

Counterpoint

It is true that home values sank by almost 20% during the 2008 recession. However, it is also true that in the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6%.

Price is determined by supply and demand. In 2008, there was an overabundance of housing inventory (a 9-month supply). Today, housing inventory is less than half of that (a 4-month supply).

Bottom Line

We need to realize that today’s real estate market is nothing like the 2008 market. Therefore, when a recession occurs, it won’t resemble the last one.

My AR banner 2017

Barbara Michaluk, Realtor

Phone 240-506-2434

Email: michaluk@verizon.net  /  Web: BarbaraSellsMDhomes.com

Authorized Leisure World Specialist / Senior Real Estate Specialist /
Internet Marketing Specialist / Certified E-Pro / Certified Staging Agent

Weichert Realtors / 3816 International Dr / Silver Spring, MD 20906

Authorized Leisure World Specialist     Barbara Michaluk Graduate Internet Marketing Specialist Barbara Michaluk Senior Real Estate Specialist   

Comment balloon 0 commentsBarbara Michaluk • October 17 2019 04:59PM
3 Reasons This is NOT the 2008 Real Estate Market in Leisure World MD
share
3 Reasons This is NOT the 2008 Real Estate Market in Leisure World MD No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the… more
Homeowners in Leisure World Are Happy! Renters? Not So Much.
share
Homeowners in Leisure World Are Happy! Renters? Not So Much. When people talk about homeownership and the American Dream, much of the conversation revolves around the financial benefits of owning a home. However, two recent studies show that the… more
What to Expect from Your Home Inspection in Leisure World MD
share
What to Expect from Your Home Inspection in Leisure World MD You made an offer and it was accepted. Your next task is to have the home inspected prior to closing. Agents often recommend you make your offer contingent upon a clean home inspection… more
4 Tips to Improve Your Home and Save on Your Energy Bill
share
4 Tips to Improve Your Home and Save on Your Energy Bill As a homeowner, it’s important to keep your home running efficiently, not only to save money, but also to help the environment thrive. October 2nd is Energy Efficiency Day a perfect time… more
What FICO® Score Do You Need to Qualify for a Mortgage?
share
What FICO® Score Do You Need to Qualify for a Mortgage? While a recent announcement from CNBC shares that the average national FICO® score has reached an all-time high of 706, the good news for potential buyers is that you don’t need a score… more
Did You Know Homeownership is the Top Contributor to Your Net Worth?
share
Did You Know Homeownership is the Top Contributor to Your Net Worth? Many people plan to build their net worth by buying CDs or stocks, or just having a savings account. Recently, however, Economist Jonathan Eggleston and Survey Statistician.. more
Selling in Leisure World MD? 5 Real Estate Acronyms You Need to Know
share
Selling in Leisure World MD? 5 Real Estate Acronyms You Need to Know Some Highlights: Learning the lingo of homebuying is an important part of feeling successful when buying a home. From APR to P&I, you need to know the acronyms that will… more
Selling in Leisure World MD -- What to Expect from a Home Inspection
share
Selling in Leisure World MD -- What to Expect from a Home Inspection You made an offer and it was accepted. Your next task is to have the home inspected prior to closing. Agents often recommend you make your offer contingent upon a clean home… more
Homes for sale in Leisure World of Maryland on Oct 1, 2019
share
Homes for sale in Leisure World of Maryland Oct. 1, 2019 The best 55+ housing opportunity in Montgomery County, Maryland! Living at Leisure World is a great lifestyle choice – its also a smart financial decision. This community is for anyone aged… more
One of the Top Reasons to Own a Home
share
One of the Top Reasons to Own a Home One of the benefits of homeownership is that it is a “forced savings plan. ” Here’s how it works: You make a mortgage payment each month. Part of that payment is applied to the principal balance of your mortgage… more