You’ve seen home prices climb sharply over the past two years, so you might be thinking, the bubble has to burst soon, right? Not so fast, according to experts. 

Many buyers and sellers speculate that we will soon see a market crash like what many of us witnessed in 2008, but we want to assure you that there are several key differences between the crash that led to the Great Recession and what is happening now, in 2022. 

While it’s reasonable for people to assume that we are in a bubble, it’s much more straightforward. A simple supply and demand crisis has created the current trends in the real estate market. Read on as we explain how we got here, what the differences are from 2008, and what you should do if you are considering entering the real estate market! 

2008 V.S. 2022: What’s Different?

There is one primary difference between the market right now and what happened when the market crashed in 2008. At that time, home prices were being driven up because of poor investor speculation, loose lending prices, and buyers purchasing homes that were not worth the price tag.

Once the market came crashing down, those unscrupulous lending practices locked people into expensive mortgages on homes worth significantly less than they owed. This led to builders halting projects, which we have been feeling the aftermath of for more than a decade. Very quickly, mortgages were in default, and people found themselves in financial ruin. 

That unintended consequence directly contributed to the current situation. Following the height of the COVID-19 pandemic, demand for homes suddenly skyrocketed. But the supply of homes needed to meet buyers’ demands had fallen very short, creating bidding wars and increasing prices.

Compounding this issue, builders face increased costs for materials and labor, tighter lending practices, and stricter building laws and regulations, further driving prices north.

A Poor Ratio of Buyers and Sellers

Until recently, we saw that there were far more people looking for homes to purchase than people selling their current homes. This resulted in sellers holding on to their properties. Homeowners were cautious about leaving their comfortable mortgages and buying into such a dynamic market.

Conversely, millennials are ready to purchase homes for their families, leaving the problem of insufficient inventory. This created the current incompatible supply and demand market that we have been living in.  

A Shift Is Upon Us

We have started to see a shift in the market where more homeowners are looking to sell their homes. Buyers are taking more time to decide what to do with the rising interest rates, and as a result, homes are sitting on the market a little longer. We haven’t yet seen a considerable price decline, but with the uncertainty in the market, it is hard to predict exactly what will happen in the coming months. That is why it is so important for sellers to work with a team of experienced agents in getting their homes sold for top dollar no matter what market we may find ourselves in.

Contact Us Today!

With the shifting market, it’s better not to wait to sell your home! We want you to make the most amount of money possible! We have proven systems that we provide to our clients, and we are confident that we are the right team to get your home sold for top dollar! We guarantee to sell your home, or we will buy it!* Don’t be overwhelmed by the current market. Let us worry about the details for you! Call us today at 804-655-0651.