Blog

By Thomas E. Haught

Although we’ve recently seen home prices stabilize, the number of homes sold is falling, homes are staying on the market longer and interest rates (although, big picture, are still incredibly low) are up. With the likelihood of a recession looming, are we looking at another housing meltdown (think 2008)? 

The first question is “Are we in a housing bubble like we were pre-2008?” Home prices have been steadily rising, inventory is low, interest rates are high–all indicative of a bubble. But not every bubble has to pop, and my office does not predict a housing crash. 

A housing slow down?  Sure.  

A housing crash?  No.

Prices will likely continue to stabilize (interpret that to mean “come down”).  But low inventory, including new construction, means that the few houses that are available will still be in high demand. Also, millennials are entering the home-buying market and lending guidelines are MUCH stricter than pre-2008. That means home buyers must qualify for the mortgages that they apply for. 

That last factor, stricter lending guidelines, is likely the most important component keeping us out of a housing market crash. Pre-2008, the trend was no doc loans, no down payment loans, buyers signing for two or even three loans at their real estate closing. The truth is, buyers were applying for, and being qualified for, loans that they could not possibly afford. Real estate was seen as the gravy train, and everyone felt like they were missing out. So, there was a massive influx of loan applications and lenders that simply did not say no. Post-2008, that recklessness is over. Lending guidelines have become much stricter, and buyers and buyers’ finances are strictly scrutinized before a loan is approved. Although the hoops that a buyer must jump through for a loan to get approved can drive a buyer crazy, it is an absolute, necessary safeguard in preventing a housing calamity.  

So, when you are buying, and the lender needs yet another copy of your paystub, stay calm! And when you are selling, and the buyer needs a few extra days for final loan approval—you must also stay claim. These strict lending guidelines, although burdensome, are truly meant to protect all of us, especially from a potential housing meltdown!

If you plan to buy a home and need legal guidance, contact Gardi Haught Fischer & Bhosale Ltd. to help guide you through the real estate industry. Request a free case evaluation below.

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