A Real Estate Professional Helps You Separate Fact from Fiction
If you’re following the news, chances are you’ve seen or heard some headlines about the housing market that don’t give the full picture. The real estate market is shifting, and when that happens, it can be hard to separate fact from fiction. That’s where a trusted real estate professional comes in. They can help debunk the headlines so you can really understand today’s market and what it means for you.
Here are three common housing market myths you might be hearing, along with the expert analysis that provides better context.
Myth 1: Home Prices Are Going To Fall
One piece of fiction many buyers may have seen or heard is that home prices are going to crash. That’s because headlines often use similar, but different, terms to describe what’s happening with prices. A few you might be seeing right now include:
Don't just read headlines. Remember, they are clickbait! For example "Home Sellers SLASH prices" kind of sounds like prices are coming down, right? When you actually read the article, you find out that sellers have reduced their listing prices to what they should have been in the first place. No more aspirational pricing!
- Appreciation, or an increase in home prices.
- Depreciation, or a decrease in home prices.
- And deceleration, which is an increase in home prices, but at a slower pace.
The fact is, experts aren’t calling for a decrease in prices. Instead, they forecast appreciation will continue, just at a decelerated pace. That means home prices will continue rising and won’t fall. Selma Hepp, Deputy Chief Economist at CoreLogic, explains:
“. . . higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”
Myth 2: The Housing Market Is in a Correction
Another common myth is that the housing market is in a correction. Again, that’s not the case. Here’s why. According to Forbes:
“A correction is a sustained decline in the value of a market index or the price of an individual asset. A correction is generally agreed to be a 10% to 20% drop in value from a recent peak.”
Not gonna happen. As mentioned above, home prices are still appreciating, and experts project that will continue, just at a slower pace. That means the housing market isn’t in a correction because prices aren’t falling. It’s just moderating compared to the last two years, which were record-breaking in nearly every way. *** And keep in mind...in the last debacle, new homes were OVERBUILT. Coming into the pandemic, they were UNDERBUILT. Builder confidence has lowered, so building is slowing down again. Population is growing. Millennials are buying. Builders not building. Uh oh. More inventory problems. ***
Myth 3: The Housing Market Is Going To Crash
Some headlines are generating worry that the housing market is a bubble ready to burst. But experts say today is nothing like 2008. One of the reasons why is because lending standards are very different today. Logan Mohtashami, Lead Analyst for HousingWire, explains:
“As recession talk becomes more prevalent, some people are concerned that mortgage credit lending will get much tighter. This typically happens in a recession, however, the notion that credit lending in America will collapse as it did from 2005 to 2008 couldn’t be more incorrect, as we haven’t had a credit boom in the period between 2008-2022.”
During the last housing bubble, it was much easier to get a mortgage than it is today. Since then, lending standards have tightened significantly, and purchasers who acquired a mortgage over the last decade are much more qualified than they were in the years leading up to the crash.
See the starred sentences above about new builds. Yes, buyer activity has slowed so now instead of two weeks of inventory we have around 2 months of inventory. Instead of two hours on the market and 20 offers, a property spends two weeks on the market with a couple of offers. It FEELS shocking after the last two years, but all is well. It's a nice change for financed buyers who didn't stand a chance during the cash frenzy.
No matter what you’re hearing about the housing market, let’s connect. That way, you’ll have a knowledgeable authority on your side that knows the ins and outs of the market, including current trends, historical context, and so much more.