The current economic chatter and predictions has caused some buyers to pause on their plans to purchase Incline Village, NV real estate. The current economy is a hot topic right now and while no one knows for sure when the next recession will occur, we do know that it will not be caused by the housing market. While there are folks out there who believe this to be true as they are using the 2008 crash as a reference, here are 3 things that prove otherwise.
In 2008, one of the big warning signs was a huge gap between household income and the growth in home prices. Currently, wage gains have been outpaced by home values and in 2006, the lack of affordability killed the market. HOWEVER: This gap between wages and home prices has existed since 2012. If this was a sign of a looming recession, why haven’t we had one already? Another point to this is that a buyer has more purchasing power today than they did 13 years ago. In 2008, people were being approved for homes they simply could not afford. Today, you have to confirm your income and ability to purchase AND we determine affordability based on home prices, wages and mortgage interest rates. Currently, our mortgage interest rates are about HALF of what they were back in 2006.
Another sign is that housing prices start slowing down in major markets. Manhattan real estate is experiencing some rapid drops in pricing which people have used as an indicator that another recession is on the way. This is due to the new Mansion tax which is stifling the demand. Truth be told, the only major market that showed true depreciation in prices was Seattle and it currently seems that that market is about to reverse with values going back up. In fact, CoreLogic has predicted that home values will go up again over the course of the next year across the entire country.
People assume that prices will crash because that is what happened in 2008. While home values did sink by almost 20% a decade ago, in the four previous recessions, home values only went down once and by less than 2%. In the other three cases, real estate values went up.
At the end of the day, prices for Incline Village, NV real estate are determined by supply and demand. In 2008, there was a 9 month supply (meaning a LOT of inventory) and today, there is half of that, which is still a seller’s market in most places. While a recession may occur, it won’t look like the last one and investing in Incline Village, NV real estate will still be a smart move. For more information on our market conditions, feel free to ask us. We would be happy to help!