We are at the record lowest rates in history. If you bought in December you paid 2.4% compared to now rates are now might get 3-3.2%. People will love the interest rates and fall in love with the HOME. What makes them love the home. The gift we are not talking about is the value of the home if you bought in 2020, 0 prices according to FHA house price index +10.8%, Corelogic +9.2%, and National home price index +10.4%. Low mortgage, pent-up demand from homebuyers, and limited supply of homes in every region of the Country to experience faster growth in 2020 compared to a year ago despite pandemic. Single-family homes supply going back to 13 yrs. We need to bring more inventory by new construction. Housing units are not keeping up with population growth. Affordable housing, In 2003-2007 the homes were overbuilt and nothing got built after that. Have seen my clients asking if they could buy an older home with land and could build 2 homes. We might see changes in the planning commission bring some changes to convert one home to 2 homes. If I was a consumer I will be concerned. There is a lot of reason we can’t compare to 2004-2005. Average appreciation 10.5%
- 2004-2005 Was very easy to finance. The market was deflated and everyone could get financing. Everyone was in the market got the financing. The product and borrower list were there. Now lending standards have been rectified. Less lending risk now than in 2004-2005
- The consumer in the USA learned that lesson. Prices were appreciating in days.
- Inventory was increasing. Everybody could get loans, but now it’s much harder to qualified.
- This market is totally different than 2003-2007.
- Its supply and demand compared to the housing bubble in 2003 wasn’t driven by demand but easier to get financing and over appreciation. Consumers were buying and flipping the home for 50k more after putting an offer and not even closing.
- We are in a very different market now