It’s been almost ten years since the last Housing Bubble, yet many people are still hesitant to enter the property market. They don’t want to be upside down in another mortgage if a Housing Collapse does occur. However, how can a person tell if a bubble does exist? What signs should he or she be looking for before entering the housing market?
When it appears anyone can get a loan, even those with horrible credit, a housing collapse may be coming. During the 2008 market decline, it was found that numerous people had been approved for a loan even though they weren’t credit worthy. These individuals then could not pay the loan as agreed and the market was flooded with properties that simply sat. Fortunately, lenders have tightened their standards and this is less of a concern. However, there are still programs that allow a person to buy a property with very little down payment. Thankfully, they come with stricter underwriting standards also.
Much has been made of the middle class and stagnant wages. Politicians continue to point out that people make less now than their parents did, when all factors are considered. When housing prices are on the rise and wages aren’t, it may not be the time to purchase. With the measures put into place by lenders, uncontrolled price inflation is less of a concern. This doesn’t absolve the buyer of responsibility, however. He or she may wish to look to cheaper areas, such as the suburbs of Cincinnati, OH, as opposed to buying in the city to ensure housing isn’t excessively priced.
Rising Interest Rates
Interest rates remain incredibly low, yet they have been rising over the past few years. When interest rates go up, fewer people buy homes. Look to the lending market to see the trend and what experts predict for the near future. If the rates are on an upward curve, it may be best to hold off on buying for a period of time.
These are only three things every person should be looking at when contemplating the Real Estate Market. Others include the current unemployment rate in an area and the foreign demand for property. If a person carefully examines the market, he or she can determine if now is the time to buy or if holding off will be wiser as a Housing Bubble exists.