Home prices are being driven up by lack of inventory and bidding wars. This can be scary and discouraging for some people looking to buy a home right now, afraid that we are in a housing bubble.
Here are three reasons why this market is totally different than the housing bubble we experienced a little over a decade ago.
- Housing supply is extremely limited. Inventory of homes for sale is currently running at less than two months. A healthy inventory is about six months, and in 2008 we were actually up as high as 11 months inventory.
- Homebuyers are more creditworthy. When the housing market crashed in 2008, mortgage standards were at an all time low for credit scores and down payment requirements, as well as providing income and assets to purchase. The current guidelines are much stricter, making the borrowers more financially secure.
- Homes have equity. Back in 2008, homeowners were pulling out equity causing many to be upside down. This time around, equity levels are extremely high, meaning that homeowners could see values decline slightly without concern.
Reach out any time with questions or if you need assistance with your home search!