In general, economic recessions have always been a topic of concern for both homebuyers and sellers. The fluctuations in housing prices during these downturns can significantly impact individuals’ decisions to enter the market.
To better understand the variations in housing prices during recessions, it is essential to consider the unique factors at play. These factors include the causes of the recession, governmental policies, interest rates, lending practices, and market conditions. By examining these variables, first time home buyer and seller can gain insights into the complex interplay of economic factors and their impact on housing prices.
To shed light on this topic, lets delve into a compelling talkshow between eXp realty realtor Linda Peltz and loan specialist Michelle Johnson from the Hero Loan Team. Their insights provide valuable perspectives on the impact of economic recessions on housing prices and the importance of understanding lending practices in these challenging times.
Understanding the Historical Trends of Recession
As Linda Peltz and Michelle Johnson highlight, analyzing historical trends during recessions is crucial to comprehending their effects on housing prices. While the 2008 recession, triggered by the housing crisis, led to a significant drop in prices, other recessions witnessed varying outcomes. For instance, the recessions in 2020, 2001, and 1980 actually saw an increase in housing prices, showcasing the unique circumstances surrounding each economic downturn.
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In video above Michelle also reveals some interesting information about historical trend during recessions. She quoted “As we examine past recessions, we can see that housing prices did fluctuate, but it’s essential to understand the unique circumstances surrounding each recession. The 2008 recession, for instance, was different because it was caused by the housing crisis. During that time, unstable lending practices and inflated loans contributed to the downturn. However, other recessions, like the one in 2020, actually saw an increase in housing prices by six percent, as did the recessions in 2001 and 1980.”
So it’s important to understand the significant changes in lending practices since recession. For instance, when banks assess adjustable rate mortgages, they now consider your current income to determine if you can afford the highest possible payment. This ensures that you won’t be granted a mortgage that could put you at risk of defaulting. So what are the best lending practices during this time?
Best Lending Practices by Hero Loan Team
One vital aspect to consider when navigating economic recessions is how lending practices have evolved since the 2008 crisis. Stricter checks and balances have been implemented to prevent a recurrence of the housing bubble. Mortgage lenders now assess borrowers’ ability to handle the maximum payment possible based on their current income, ensuring responsible lending and reducing the risk of defaults.
Michelle from the Hero Loan Team emphasizes that different loan programs, including VA, FHA, and conventional loans, come with varying criteria and debt-to-income ratios. The Hero Loan Team specializes in assisting heroes in the community, such as law enforcement personnel, firefighters, military members, educators, and medical professionals. These individuals may even qualify for debt-to-income exceptions, providing them with more options to achieve homeownership. However, responsible lending remains a top priority to mitigate the risk of another housing crisis.
Given the abundance of misinformation in the market, eXp realty realtor Linda Peltz and Michelle Johnson emphasize the importance of consulting with mortgage loan officers to make informed decisions. Waiting for a recession or expecting interest rates to drop might not always be the best strategy. Loan officers, like Michelle, possess accurate information and industry expertise to guide potential buyers and sellers through the complex mortgage process. Their guidance can help individuals navigate the ever-changing real estate landscape with confidence.
Hero Loan Team
Linda Peltz, eXp Realty | DRE 01997670