Anyone who lived through the 2008 recession and subsequent housing market crash is likely feeling a little worried. After all, home prices have risen quite a bit in the past few years, and inflation is at a 40-year high.
But does that mean we’ll find ourselves in a situation similar to the late 2000s?
Likely not — because today’s market conditions are starkly different from what was happening in that period.
And in fact, the 2022 housing market is quite strong. Here’s why:
Demand far outweighs supply. Housing inventory is extremely low, and demand continues to surge. Demand will likely remain strong for the foreseeable future as the practices of remote work and buying and selling online continue. These two factors keep home values up and provide a steady stream of buyers as properties hit the market.
Lending standards are stricter. It was much easier to get a mortgage 15 years ago. After the crash, lenders created more rigorous standards for borrowers and the financial situation they need to be in to take on a mortgage. Due to these tighter requirements, most homeowners aren’t at risk of foreclosure if the economy heads toward a recession.
Homeowners have a lot of equity. The average homeowner gained over $55,000 in equity in 2021 alone. In the event of a recession, most homeowners could sell their homes and still make a healthy profit.
There’s no crystal ball to predict the future, but the housing market is on strong footing, even through the ups and downs.
Want to discuss your goals for buying or selling real estate in today’s market? Please reach out.
As a homeowner, your house is likely your biggest asset.
It can help you build wealth and improve your finances — and in retirement, it might serve as a much-needed source of financial support.
That last part is important. Whether you’re 25 or 55, having a plan is critical to an enjoyable and worry-free retirement.
Want to know how your home can help you plan for your golden years? Here are four ways it can factor in:
- You can leverage your home equity. Most homeowners are sitting on serious amounts of equity right now. You can tap into that by taking out a home equity loan or home equity line of credit (HELOC). In retirement, these can be great options for covering medical bills, paying off higher-interest debts, or funding home improvements.
- You can sell and use the profits. Many retirees choose to sell their homes and downsize to a smaller property. If you decide to take this route, you can use the sale proceeds to support your retirement — plus, you’ll enjoy a smaller home that’s easier to maintain.
- You can refinance. Refinancing could help in a couple of ways: A regular refinance may help you reduce your monthly payment and create liquidity. But if you opt for a cash-out refinance, it could also give you funds to use toward your retirement goals.
- You can rent out your home. Your house can become a source of regular income in retirement if you rent out a room or the whole home for short- or long-term tenants. Get in touch to learn about local laws and restrictions.
A home can be a valuable financial asset at any life stage. Are you interested in buying a new property? Get in touch today for help.