One of the most important parts of being an agent is being able to have a relevant market opinion based on facts. And this goes beyond just our local data. When you think about it, most buyers and sellers are already forming their own opinion of the market because of what they see in the national media. So, not only do agents need to know what’s happening in real estate locally and nationally, they need the facts and data to back it up.
Here are the biggest misconceptions about today’s housing market and the facts that help explain it best.
#1: WE’RE IN A HOUSING BUBBLE
The Facts
While today’s housing market is anything but normal, it’s not because of the same circumstances surrounding the housing bubble of the early 2000s that caused the crash. Back then, new construction single-family homes flooded the market, lending standards were incredibly loose, and many homeowners were cashing out their equity left and right. Today’s market is nearly the exact opposite.
Since the housing crash of 2008:
- Lending standards have tightened
- The market is under-supplied rather than over-supplied on inventory
- Most homeowners are much more cautious with their equity
Plus, housing market experts are forecasting continued price appreciation this year, as demand continues to outweigh home supply.
#2: LOTS OF FORECLOSURES ARE COMING
The Facts
Stories about the volume of foreclosures are all over the news today. But the most important thing to remember is context is everything. Yes, many homeowners were able to pause their mortgage payments during the forbearance program, and there was legitimate concern from many experts that it would result in a wave of foreclosures coming to the market.
However, the number of foreclosures we’re seeing today is nothing like the last time.
Here are some of the reasons why that’s happening:
- Most homeowners have enough equity to sell their homes
- There have been fewer foreclosures over the last two years
- The current market can easily absorb the new listings
Today’s data shows that most homeowners are exiting their forbearance plan either fully caught up on payments or with a plan from the bank that restructured their loan in a way that allowed them to start making payments again.
For all of these reasons, experts don’t anticipate a wave of foreclosures that would negatively affect housing prices.
#3: HOUSING PRICES WILL DEPRECIATE
The Facts
This might be one you’ve heard a time or twenty. Skyrocketing price appreciation has many sellers and buyers sitting on the fence. However, experts don’t project home prices to go down anytime soon. Instead, data from earlier in the year has already been adjusted to be higher than previously anticipated.
So, how do you help answer this question? First American explains it like this:
“While house price growth is expected to moderate from the rapid pace of 2021, strong home buyer demand against a backdrop of historically tight inventory of homes for sale will likely keep appreciation positive in the coming year.”
For both buyers and sellers, this means one thing: playing the waiting game is a risky business. When it comes to sellers, the higher price appreciation over the last two years has been great for their home’s value. But if they’ll also be buying a home after selling, they shouldn’t wait for prices to fall. In both cases, waiting will only cost more in the long run because climbing mortgage rates and rising home prices will have an impact on their next home purchase.
Bottom Line
Your agent has a tremendous opportunity to step up and be the advisor you need in this tough market. And that means being able to clear up a lot of confusion about what’s really happening in real estate. By connecting with a trusted advisor, you can then help educate yourself. And the best way to do this is by constantly staying up-to-date on the latest market insights.
Fontaine Family – The Real Estate Leader was awarded 2019 Maine Family-Owned Business of the Year, voted Best Real Estate Company in the Greater Lewiston/Auburn Area and Greater Portland Area, recognized by Real Trends as America’s Top 250 Real Estate Team and published in the Wall Street Journal in the Top 250 Real Estate Professionals ranking in the top ½ of 1% of Realtors outperforming 99.9% of the nation’s Realtors. Fontaine Family Team serves 8 counties – Androscoggin, Cumberland, York, Sagadahoc, Oxford, Kennebec, Franklin and Somerset – in two locations, 336 Center Street in Auburn and 432 US Route One in Scarborough. For more information visit BrendaFontaine.com, download our new app “Fontaine Family Real Estate” or call (207)784-3800 or (207)289-3830.