Real Estate Market Crash? 3 Reasons Why NOT!

Full Video Transcript Below

[00:00:00] Well, good morning, everybody. Alice Lema here, broker John L. Scott here in Southern Oregon with another edition of our weekly podcast of all things housing. And today we're going to talk about three reasons why there's no wave of foreclosures coming. There's not another housing crash coming. So if you're waiting, don't do that.

[00:00:18] Even if you're buying or selling, doesn't matter, don't do that. But before we get started, I want to say, take a minute, please subscribe to the channel, give us a thumbs up, leave a comment. Pass it on to your friends?. It's an educational endeavor we have going on here. Want to make sure that it's helping.

[00:00:33] Okay. So with that in mind, are you waiting for another crash? I'm going to give you three reasons why there's no way foreclosures coming down the pike. Okay. So the first reason is just pure supply and demand, you know, in 2008, when the market crashed and there were all these foreclosures, there was an oversupply of houses for sale. So let's go back to just general supply and demand in, in any market. So right now we have exactly the opposite scenario in our housing market, pretty much nationwide. It's exactly opposite right now than it was in 2008, 2009, where back then we had a nine months supply on the market.

[00:01:18] And if you remember from my other podcasts six months, 180 days, timeline for selling a property was about normal neutral. Four to six months is about a normal neutral market. The buyers aren't in charge of the sellers aren't in charge. That's 180 days, four to six months, 120 days. Okay. But in 2008, 2009, it was nine months. Definitely a buyer's market.

[00:01:41] We just don't have that, the number right now, the average supply in the United States is three months, that's 90 days. That's not a hyper accelerated sellers market, but it's definitely still moving at a pretty good clip. So in 2008, we had a nine months supply. Now we have a three-month supply and these are national averages.

[00:02:01] Your neighborhood, your zip code, your part of the country will be slightly different. However, the average experience that we're all having across the country is that we're still in a shortage. Okay, so pure supply and demand. There's reason number one, why there's no wave of foreclosures coming.

[00:02:20] Number two, equity abounds in homeowner's pocket book. Properties have gone up since the pandemic. And you know, when the shutdown happened, people were not sure which way it was going to go. So now that we know, cause a lot of this is behind us and we're looking at the numbers, we're settling down a little bit, but we still have enormous amounts of profit just in the last 18 months. And if you purchased a property before that, then you have that equity plus the pandemic.

[00:02:49] And in our little area, we have that plus the pandemic, plus the fires. So everybody has lots and lots of equity. When you have equity that gives you wiggle room to sell your property. If your life is taking a down turn, if you financially need some money and you really have to sell your house, you can, and you can put that profit in your pocket and go do something else.

[00:03:12] Or you're just not going to be in a short sale or foreclosure. And we're talking about 93% of homeowners have at least 10% equity, according to KCM, keeping current matters, another one of my favorite websites. So 93% of homeowners nationwide have at least 10% equity. That's more than enough to sell your property and avoid a short sale or a foreclosure.

[00:03:39] And most of us have way more than that. Okay. Well, I shouldn't say most of us in way, but it sure seems like at least in our area people have buckets and buckets of equity. Okay so 10% equity is important because it enables property owners to sell, to downsize to become a tenant or just at least avoid a short sale or a foreclosure. Okay. So that's number two. Everybody has equity. We just don't see people needing to lose money. If they sell their house.

[00:04:07] Okay number three, credit standards are way higher now. The credit companies that issue mortgages and give you loans for, for real estate, their standards, their rules, they vet people way more strictly now than they used to.

[00:04:24] So if you remember back in 2000, 2005, 2007, it was a free for all. And the credit markets, you know, we used to joke that if you could fog up a mirror, you could get a home mortgage. So that's not the case anymore. Not only do you have to prove your income, you have to have multiple checks from your employer, not checks, but check-ins.

[00:04:48] They, they verify your employment. They verify your bank account multiple times. They verify this by the time you close on a property now, with just a regular simple, residential mortgage, it seems like four to six times you've had to produce the same documents and it does get kind of annoying. But they're going back and checking and double checking that you didn't quit your job, that you didn't take your down payment and go to The Bahamas or, you know, fill in the blank. Something happened. You didn't go buy a household full of furniture on a credit card.

[00:05:20] So, but that's the long way around you to say our number three credit standards, way higher, way more strict. And the loan companies are way more diligent. So any of the iffy or borderline borrowers is what we call ourselves when we're trying to get a mortgage.

[00:05:33] We're the borrower, we're the buyer. If you're borderline, you either have to get a co-signer a partner or you lower your pre-approval amount, or you just have to wait to buy your house. So it's just a, it's just a different environment now. So those are the three reasons why myself and a lot of other real estate people and economists, national association realtors. We're all sitting here thinking there's not going to be a crash. What we're experiencing is some price reductions coming off the highs. We're seeing a lot more inventory. It's feels a little familiar, but we're just settling. Okay so whether you're buying or selling, investing first time, home buyer downsizing, upsizing, don't wait.

[00:06:18] It's not a good idea to time the market anyway, but that's a different podcast. Okay. So there's your three reasons why there's no wave of foreclosures. We're not having a crash

[00:06:27] I'm Alice Lema, broker here at John L. Scott real estate in Southern Oregon. I want to be your agent. I'm a great listing agent. I'm a great buyer's agent. I help first time home buyers, tenants, downsizers, upsizers. Big fan of helping elderly. I am technically an elder, borderline elder myself. Have done the downsizing thing. I'm great in that situation. I'm also good with investments. So give me a call, give me a text. My number is 541-301-7980.

[00:06:56] Don't forget to subscribe and like the channel be back next week with another boatload of opinions. Talk to you later. Have a beautiful weekend. 541-301-7980, by now.