The State of the Housing Market in 2020
With economists offering bleaker assessments of the ramifications as the pandemic rages on, eyes are now on the housing market. In America, those eyes are somewhat justified. The housing crash of ‘08 took years to recover from, and many experts predicted a 2020 crash before COVID-19.
So how does the market look now, and what do the latest predictions say? That’s what the latest Summus Realty blog is all about! Learn more about the housing market and how it may change moving forward here.
A Quick History Lesson: The Crash of ‘08
Whenever a crisis may seem like it is looming, the ‘08 crisis comes to mind. The crisis of ‘08 could be traced back to several years before the crash, as some have, but we’ll start our analysis in 2006.
In 2006, the first signs for most market analysts began to appear in the form of falling home prices. While this looked like stability from a quickly-rising market, it was actually the beginning of the trouble. While home prices fell, derivatives called mortgage-backed securities became bad investments that had proliferated among banks and investors.
These securities were often based on loans that used home loans as collateral, but many of the loans were poor. These poor loans were called subprime mortgages, characterized by low credit scores, high interest, and often high down payments. So as home prices began to fall, these loans become even worse.
These subprime mortgages were owned by banks, investors, hedge funds, and pension funds, who all were hurt by people being unable to pay their loans. Credit default swaps were supposed to protect against derivatives that lost their value, but unfortunately, insurance companies couldn’t honor all the swaps being asked for.
By then, government intervention tried to step in, the crash was already set in motion. 2008 would see a terrible crash play out over the course of a year that hadn’t been seen since decades prior.
The Current Housing Market
Luckily, some of the forces that allowed the housing crash of 2008 to occur have been addressed since then. Now there are restrictions on subprime mortgages, as well as more government fail-safes in place to catch the market if there happens to be an issue.
Also, in most recessions and pandemics, the housing market did not crash out. Instead, evidence suggests that the market simply slowed or froze. Prices did not fluctuate that much, in part due to a lack of transactions.
The federal government has also stepped in to do its part by implementing a moratorium on foreclosures and helped those with mortgages backed by a federal entity. So the housing industry is in much better shape now than it was in our last recession.
In the early stages of this pandemic, it seems that the housing market will experience more of a slowdown than an outright crash of sorts.
Choose Summus Realty For Your New Home!
In these precarious times, it’s important that your new home comes from a group you can trust. That’s where Summus Realty comes in. We’ve spent years matching the people of El Paso with their dream homes, and we’d love to do the same for you!
If you have more questions about the market or would like to see your dream home, contact us today to speak with an expert!