Since the January 2022 and spring of 2022, the real estate market, as you know, has taken a turn. It has shifted. The talk of the town is, is there a housing bubble? What is going to happen with the prices? 

Let’s look at two or three reasons why they are saying that and see what happens in the coming months of the real estate market. Many people, especially the homeowners who lost their homes, lost their jobs in the recession of 2008. Remember how severe the recession was and how devastating the housing market was. And those memories are still fresh. 

According to reports from ForbesRealtor.com and Attom, here are 3 REASONS:

REASON #1

In the last recession, there was an oversupply of homes. There were homes for sale. They were sitting on the market for 4,5,6,7 months and there was a supply of six to seven months of homes for sale. This market is totally different. Even though the prices are very high, interest rates have gone up. Right now there is an undersupply of homes. There’s a lot of demand, even in this high market, with high-interest rates, and high inflation. There are homes selling within twelve to 14 days. Yes, last year they were selling within eight days, according to the CRMLS. But these days, it’s taken twelve to 14 days to sell, which is almost double the pace. But that’s way shorter than what the normal market was in 2008 when it took three, four, or five months to sell a home. So there is a shortage of homes. And that’s one reason we may not be in a housing market crash, not anytime soon. 

REASON #2

There may not be a housing crash is that the loans that have been given in the last 4,5,6,7 years, or even longer, the lending standards have been very tight. It’s very difficult to get a loan. I just closed a transaction for four units in Palm Springs, and it took three weeks longer than normal to close the transaction because the lenders were very tight. They asked for a lot of things from the buyers, even though the buyers had a FICO score of almost $780 and they were putting 40% down. So this has been the trend for the last 5,6,7,8 years and moving on, they’re still very tight. They’re going to be sound loans. And that’s one of the reasons the housing market may not crash. 

REASON #3

We have built up a lot of equity. Equity has been the strongest in history in the last 50, 60, and 70 years. Let’s look at some scenarios. In Orange County, for example, just in one year, home prices have gone up almost 15% on average, that’s just in one year. But in the last two or three or four years, they’ve gone up five to 10% per year. So let’s say the home prices on average, not only in Anaheim where I live, or in Orange County and all of California, let say prices have gone up 40%, which I truly think on average they’ve gone up 40%. In Anaheim Hills, an average home or a median-priced home is about a million dollars. So if I bought a house, let’s say four or five years ago, and let’s say that house was worth $800,000, today that house is worth $1M or maybe $1.2M. If there’s one very strong reason there is not a housing crash coming soon is because of equity. That’s a very powerful word, and there’s a lot of equity with all the homeowners. 

BONUS REASON

Now, the bonus reason why there may not be a crash or there may be a slowdown in when the crash is coming is because these days there’s a lot of inheritance money coming into the kids, the grandpas, and the dads and the moms and the uncles. They’re giving money to the kids, so they’re giving them big down payments. It’s not like before. In 2008, people had to buy homes with barely a 3% downpayment. Right now, a lot of homes are being bought with 2030 40% down. I’ve sold at least three homes in the last six months. Where the money came from grandpas and uncles and dads. So even if there was a difficulty, they’re going to have a helping hand from their family. So that’s an additional bonus. So what? The experts are saying there is not a housing market crash soon.