Comparing Housing Market NOW (2021/2022) vs. THEN (2006/2007)

Posted by Shawn Bhakta on Monday, October 25, 2021 at 12:26 PM By Shawn Bhakta / October 25, 2021 Comment

This housing market is definitely not like that housing market.

Yes, I'm talking about this housing market right NOW in 2021 and 2022 comparing to the market THEN, remember that boom in 2006 and 2007 is not the same.

Here are some reasons why I'm saying that.... Number 1, in that market in 2006 and 2007, there were a lot of straw buyers. Means they're not investors, they're not homeowners, they're just buying the house thinking the market price is going to go up. So what they did, they took a big risk. They got properties, which they cannot afford. And they took a big burden of the finance buying multiple properties, not only 1 or 2 properties.

And the loan was very easy to get. So they got many properties and that actually created a vacuum in the market. So those are not real buyers. They are buying the property, not a real strong mortgage. It was easy to get qualified those days. You have good credit, they don't check the income, they don't check the assets and you get 100% loan those days. Now there is no 100% loan. There may be some lenders who do 100% few financing, but this is 80/20 loan, but it has to have a lot of other criteria. Income, the tax return, they're going to check, they're going to check all the credibilities, including the credit.

So straw buyers are the one of the major reasons the housing crashed that time in 2007. Actually, at the end of 2007, the housing market crashed.

Another reason is the interest rate, and then the interest rate, even the good interest rate was over 5%. Now the interest rate is below 3%.

So what happened? One thing is the real buyer now is the affordability. So because of the low-interest rate, someone can buy a property with a 30 year fixed mortgage and lock that payment with a low monthly payment. And it's affordable. So if they rent out the house, they don't have to pay money from their pocket because the monthly payment is low. Back then the interest rate was high. So even though someone was renting the property, when they get the rent, they have to pay from their pocket to keep that mortgage going.

And when the market shifted, they couldn't keep up. So that's why there are just so many foreclosures in that time. After that, it was 2008 '09 and '10.

You guys saw so many foreclosures, they couldn't keep the property. And the other reason is getting qualified. Now getting a qualification is more Standard. The rules are standard. There is no Doc loan, no income verification is not there. It used to be that time. So because of all this reason, the housing market then before it crashed in 2006 and 2007 is not like this one.

Now in 2021 and 22, you're going to see this is a more stable market, even though the prices are going up like crazy. But there are tons of reasons why it going up crazy? But this is a stable steady. It's going to go up and a lot of experts are saying that the market will be steady is not going to come down. So again, that market is not this market. So don't go for that at me.

If you want to buy and sell, make that decision now and go for it.