One of the most important parts of being an agent is having a relevant market opinion based on facts.
And this goes beyond just your local data. When you think about it, most clients are already forming their own opinion of the market because of what they see in the national media.
So, you not only need to know what’s happening in real estate locally and nationally, you need the facts and data to back it up.
Here are the biggest misconceptions about today’s housing market and the facts to help you explain it best to your clients.
#1: We’re in a housing bubble
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.
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 outweighs home supply.
#2: Lots of foreclosures are coming
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 could pause their mortgage payments during the forbearance program. Many experts had a legitimate concern 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 is 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 loans to allow them to start making payments again.
Experts don’t anticipate a wave of foreclosures that would negatively affect housing prices for all of these reasons.
#3: Housing prices will depreciate
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 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 historically tight inventory of homes for sale will likely keep appreciation positive in the coming year.”
This means one thing for both buyers and sellers: playing the waiting game is a risky business.
The higher price appreciation over the last two years has been great for their home’s value when it comes to sellers. In any case, waiting will only cost more in the long run because climbing mortgage rates and rising home prices will impact the next home purchase.