Las Vegas Real Estate News

Why Today Is Not 2006 In The Housing Market

Lots of people saw it coming, but no one wanted to admit it or even say something. The Real Estate Crash of 2007 was like the Titanic. In this case, everyone saw the iceberg, but was having so much fun, they didn’t say anything. More than that, the ones who did shout about the iceberg, the sound of the band was so loud that no one heard.

In 2006, house prices were massively over-inflated. There were all types of crazy "creative" financing going on. Buyers were getting half-million dollar houses with no money down. Everyone was getting their fees and collecting paychecks, but no one was really paying into the system.

When that Ponzi scheme crashed, it took the whole economy with it.

Reading real estate news in the newspaper

The 2018 housing market is not 2006.

Here is a list of reasons that things are different now:

  • In 2006, creative financing caused a run on home sales as people were able to get massive homes for very little down and very little proof that they could handle the mortgage. For the most part, those schemes are gone and everyone getting a mortgage today can handle the mortgage. You have to qualify for the loan and show you can afford it.
  • Home prices are rising today because there is a physical shortage of homes. Home builders are cautious and aren’t building hundreds of houses at once. They got stuck with a lot of expensive empty houses last time. That’s creating a true shortage instead of a free money buying frenzy.
  • Interest rates are still relatively low, so there is still demand. While those rates are expected to rise in the next year, they are still low enough that buyers are interested.
  • There is a lot of fear in the market of going through another 2007. That’s good. The entire problem in 2007 was that people were overly enthusiastic about something that couldn’t last. Today’s home sales look more like they should: real buyers and real homes.

With all of that, if you’re a seller, price your home reasonably and being willing to flex a bit. If you’re a buyer, don’t get a mortgage you can’t handle. If the economy takes a dive, you need to be able to pay the bills.

As far as homes are concerned, 2018 is not 2006 and if we’re smart, it won’t happen again.

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