Today's Market Is Different Than The Great Recession And Here Is Why?

If you've been looking at homes for sale in Dallas recently, you're probably aware that home prices are quite high. Trends show they will continue to remain elevated for the foreseeable future. Many potential homebuyers are concerned that today's real estate market is comparable to the conditions that led to the bursting of the housing bubble in the early 2000s. However, the truth is that today's market conditions are actually quite different than those that led to The Great Recession. Here's what you should know.

The major similarity between then and now is the high price tag on real estate, making the purchase of a home inaccessible for a substantial portion of potential buyers. However, numerous circumstances were unique to the previous period of steep home costs. Back then, many lenders had relaxed their qualification standards, leading to the writing of risky home loans to buyers who wouldn't have qualified in the past. In addition, there was a large influx of investors looking to make a profit on their transactions, rather than to live in the homes.

These events led to the formation of the housing bubble. The lessons of The Great Recession mean that today's lending criteria are more stringent with stronger oversight. A positive outcome of this is that the majority of mortgages offer a fixed rate, providing stability for buyers. Home buyers no longer face the types of predatory lending risks that were rampant 15 years ago.

What's driving the high home costs of today is an imbalance in supply and demand. Fewer homes are on the market, yet people are still clamoring to buy. A variety of factors have combined to create this perfect storm.

Home building has not kept up with the rate of demand over the past decade or so. While builders are scrambling to make up for the deficit, they're running into hurdles caused by the pandemic. These include shortages of labor and land, along with rising supply costs.

In addition, fewer people are selling their homes. This makes sense given current market conditions. Many current homeowners would rather invest in renovating their properties rather than risk having to enter the fray of today's real estate market in search of a new place to live.

There is already an abundance of people looking to purchase a home. People in their 30s are seeking a place to build their families. In addition, circumstances of the pandemic have led to more worker flexibility that motivates folks to seek housing to fit their new lifestyle.

A number of conditions such as the completion of new builds and a leveling out in demand due to rising mortgage rates will likely bring home prices down, but that could take a few years according to experts.

In the meantime, it's recommended that you don't pin your hopes on waiting for a non-existent bubble to pop. There's no sudden drop in home prices on the horizon. Instead, it's wise to consider your options and be amenable to compromise. An experienced real estate agent in Dallas could provide strategic guidance to help make your dream of homeownership a reality, even in today's market.