Three Myths To The Current Housing Market…
Three myths to the current housing market: #1) We are headed for a bubble. Homes have risen in prices for 76 straight months. However, this next recession will be considered a “normal” recession after years of economic growth and employment. Webster defines a recession as, “a period of temporary decline during which trade and industrial activity is reduced and a fall in the Gross Domestic Product for 2 consecutive quarters or more.” All economists read for this report do not see housing as the cause of the next recession unlike the bubble where lending and housing was the only cause. REALITY TO THE MYTH: At the height of the crash, we had a ten month supply of homes; currently we are at 3 months.
MYTH #2) Rumored Recession will lead to the crash – REALITY TO THE MYTH: Housing is expected to be a bright spot, the last part in and the first segment out of the recessional.
MYTH #3) There is an affordability crisis: There is some truth to this for some southland buyers, and sellers will have to come to terms with affordability if they wish to sell. REALITY TO THE MYTH: Monthly cost of home is price times interest rate. We have risen to approximately the mid to high 4 percentile, depending on the loan product. According to economic data, rates would have to hit 6% and higher to seriously impact housing.