5 Simple Graphs Proving This Is NOT Like the Last Time: Part III

There are many reasons why this real estate market is nothing like what it was in 2008.
Photo Copyright : leeavison / 123rf.com

With all of the volatility in the stock market and uncertainty about the Coronavirus (COVID-19), we have heard concerns we may be headed for another housing crash like the one we experienced from 2006–2008. That feeling is understandable, but we’re here to tell you that should be the least of your worries. 

It’s tempting to try and time your home buying decision based on current events. However, such an important financial decision should always be based more in your personal household finances than in the day-to-day activities of the stock market. If your household finances look strong, now could still be a very good time to buy a home.

There are many reasons why this real estate market is nothing like what it was in 2008. We have broken out those reasons for you over three posts. Here is the last post in the series covering five visuals that prove our market is not gearing up for a housing bubble like we saw in the 2000s.

This post is part of a three-post series. Read Part I here. Read Part II here.


Reason 5: People are equity rich, not tapped out.

Typically, during bear stock markets (markets on the decline), investment dollars are diverted into real estate because of its long term stability. That stability means that recessions rarely cause home prices to go down. In fact, during five out of the last six recessions, home prices increased.

In the run-up to the housing bubble, however, homeowners were using their homes as a personal ATM. Many immediately withdrew their equity once it built up, and they learned their lesson in the process. 

Prices have risen nicely over the last few years, leading to over 50% of homes in the country having greater than 50% equity. But owners have not been tapping into it like the last time. Here is a table comparing the equity withdrawal over the last three years compared to 2005, 2006, and 2007. Homeowners have cashed out over $500 billion dollars less than before:

During the crash, home values began to fall, and sellers found themselves in a negative equity situation. The amount of the mortgage they owned was greater than the value of their home. Some decided to walk away from their homes, and that led to a rash of distressed property listings (foreclosures and short sales), which sold at huge discounts. Those distressed properties in turn lowered the value of other homes in the area. That can’t happen today.


We are Here to Help

Do the graphs above help alleviate some of your concerns about the state of real estate during the Coronavirus crisis? Hopefully you can see we’re not making the same mistakes that led to the housing crash of 2006–2008. 

If you’re still concerned, we hope you will read the first two parts of this blog post series. Read Part I here. Read Part II here.

In times of crisis and times of ease, there is simply no substitution for professional, practiced experience on your side. Beverly-Hanks is proud to be chosen by more buyers and sellers than any other firm in Western North Carolina. Our agents are ready to help position you for success during the next decade.

Real estate is always changing, but one thing stays the same—our commitment to our clients. Give us a call—We are here for you!

All real estate is local. In order to make confident real estate decisions, it’s important to have timely and neighborhood-specific information. Contact us today to speak with a Beverly-Hanks real estate agent about buying homes and land in Western North Carolina. View all Beverly-Hanks real estate listings.

This post series adapted from SimplifyingTheMarket.com.

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