3 Points to Discuss With Clients About a Housing Crash
With increasing home prices, many people are concerned that we’ll have a repeat of 2008’s housing bubble and market crash. When your clients ask: “Are we in a bubble?” or “Is the market going to crash?” Do you know how to answer? Today I’m sharing a few talking points you can touch on to explain how a bubble happens and why we probably aren’t in one:
Hopefully you can use this quick explanation to reassure your clients.
1. What causes a housing crash? I began my real estate career in 2004 and worked through the crash of 2008. It was brutal. A housing crash is caused by runaway prices, predatory loans, adjustable-rate mortgages, and lower down payments. That’s not what we’re seeing now. 25% of purchasers in the D.C. area are currently cash buyers, which is insane! We don’t have the no-down payment, non-documented, stated-income loans that we had in the past.
2. We have less inventory. During the market crash, we had four times as many homes for sale as there were buyers. Right now we have an extremely tight inventory situation.
3. We have much lower interest rates. Since we have such low interest rates, people want to lock one in for 15 to 30 years. Explain to your clients that this means people are involved in real estate and not avoiding the market.
All things considered, I don’t believe we’re in a housing bubble or headed toward a crash. We could see things cool down and prices plateau or dip, but real estate is a long game, and if you’re in it to win it, I wouldn’t be concerned. Hopefully, you can use this quick explanation to reassure your clients.
If you have questions about this or any other real estate topic, call or email me. I would love to help you.