Andy ~ good question! I’ve been selling since 2003 - I saw that market and the biggest differences:
1. TODAY - lack of inventory (there is a strangled supply of homes for sale bc people have gridlocked the market into not selling - mainly due to being scared to list (and thus move) in COVID market feeling it to be unsafe being in contact with so many people during the moving process.
Before in ‘06, mushrooming inventory due to #2 —>
#2. Lenders have regulatory leashes now, b/c they went unregulated and became incredibly predatory on the public - The ‘06 (and beyond) debacle nearly took us into a depression. In ‘06 there were too many predatory lenders - with loans given out to people that shouldn’t have been approved in the first place for a loan - with poor credit and/or insufficient underwriting to truly clear them as a bonafide loan approval. People started to default and thus too many homes simply flooded the market. Again, many were forced to sell bc they couldn’t afford adjustable interest rates that kept going up and up ⬆️ interest rate-wise and thus payments too. Once supply became too much, then prices leveled off, then fell, then worse --> the crater of the Great Recession hit the entire US and prices SUNK - and quite frankly this affected the entire world, because banks were/are now internationally interdependent on each other. Consequently, lenders aren't allowed to loan to just 'anybody with a pulse' anymore. They must qualify them honestly & fairly - what a concept, right? :) The regulatory agencies watch lenders like a hawk now, thanks to new regulation passed during the Great Recession.
In my opinion, two things will have to change - and significantly - in order for the market to become 1st a balanced market, and later on a Buyer's Market: 1) Supply of homes for sale MUST go up. 2) Interest Rates would have to significantly rise - 1,2,3 percentage points higher than they are. This would make homes much less affordable than they are today @ 3% rates (give or take) on a 30 year mortgage. Rule of thumb - for every 1% increase in interest rate, you can expect to pay 10% more on the mortgage. Imagine going from 3% to 5% - a $2,000 mortgage would be approx $2,000 x 1.20 = $2,400/month. That's $400/month x 360 months (30 yrs) = $144,000 more you pay over the life of the loan. These numbers btw are not accurate - they're just a ballpark of what you'd pay. People couldn't afford to buy as much a home, so sales would slow, increasing inventory over time. Rates typically go up with an improved economy. And that may take quite a while with millions still unemployed b/c of the Pandemic.
Hope this makes a little bit of sense. It's easier to chat. Reach out if you wish. Thanks Andy!
