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Learning from Past Mistakes

Tuesday, December 11, 2018   /   by June Quilantang

Learning from Past Mistakes


One of the best things about Americans is that we learn quickly. The last real estate market crash in 2008 was a huge event that left the nation traumatized. A lot have been speculating about the future of real estate since then, paying close attention to all trends and changes, making them seem a bit paranoid. Good news is, everyone has is now more aware because of that, people are now more responsible and all signs point to a better more stable 2019 for the real estate industry.

What happened then...
When real estate values began to surge last decade, people started using their homes as personal ATMs. Homeowners would refinance their houses and convert their equity into instant cash (known as "cash-out" refinances). Because homes were appreciating so rapidly, many homeowners tapped into their equity multiple times.

This left homeowners with little-or-no equity left in their homes, so when prices started to fall many homeowners found their houses in a negative equity situation (where the mortgage amount was greater than the value of the home). When some of these homeowners saw that there was no value left in their houses, they just stopped paying their mortgages altogether.

Banks eventually foreclosed on those homes and the foreclosures drove prices down even further and put more homes in the negative equity category. This cycle
continued, leading to the worst housing crash in almost one hundred years.

What's happening now...
Again, Americans are seeing their home equity grow. Today, over 48% of all single-family homes in the country have over 50% equity, and yes, some families are tapping into that equity. However, this time around, homeowners are not making irresponsible decisions.

According to the latest information from Freddie Mac, the total equity being "cashed out" is a fraction of what it was leading up to the crash.

Here are the numbers: The recklessness that accompanied the build-up in equity prior to the last crash does not exist today. That makes this housing market much more secure than the one we had heading into 2008.

Reference: http://bit.ly/2Qu5iHh  

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The information appearing herein has not been verified by the Hudson Gateway Multiple Listing Service, Inc. or the Hudson Gateway Association of Realtors, Inc. or by any individual(s) who may be affiliated with said entities, all of whom hereby collectively and severally disclaim any and all responsibility for the accuracy of the information appearing at this web site, at any time or from time to time. All such information should be independently verified by the recipient of such data. This data is not warranted for any purpose.

©2019 Hudson Gateway Multiple Listing Service, Inc. All rights reserved.

The data relating to real estate for sale or lease on this web site comes in part from MHMLS. Real estate listings held by brokerage firms other than eXp Realty - New York Real Estate Experts are marked with the MHMLS logo or an abbreviated logo and detailed information about them includes the name of the listing broker. The information appearing herein has not been verified by the Mid-Hudson Multiple Listing Service, Inc. or by any individual(s) who may be affiliated with said entity, all of whom hereby collectively and severally disclaim any and all responsibility for the accuracy of the information appearing at this web site, at any time or from time to time. All such information should be independently verified by the recipient of such data. This data is not warranted for any purpose. ©2019 Mid-Hudson Multiple Listing Service, Inc. All rights reserved.