Some home buyers are preferring to wait for the crash to enter the home-buying market. Typically, these are people who remember the woes of the market from mid-2006 through early-2011. Prices suddenly falling as lenders called loans and subsequently foreclosed on home. “This time we’ll be ready to pounce”, they say. Or: “We’ll wait for the bubble to burst so we can afford to buy the home we want.”
While everything about real estate is cyclical, no one know how long any given part of any cycle will last. Also true is that no one know how high or how low the cycle will go. Last but not least, cycles are usually not repeatable because the government is usually forced to enter the fray. While we all like to talk about market forces, government often acts (perhaps too late) to even out the swings. New regulations are enacted to avoid mistakes of the past. Often, closing old loopholes only opens new ones. This is where people seeking opportunities will find their next avenue.
Rather than wait for the crash, another crash, government intervened in a big way starting in 2009. By 2010 it had new laws governing lending to avoid any repeat of the mortgage melt-down. 2,500 pages of new laws. As I write this in late August 2020, we are still seeing new rules being implemented to follow these laws. The quick and simple summary is that not everyone will be able to qualify for a mortgage. This is unfortunate but understandable given what happened leading up to mid-2006 as well as the after-effects that continued for about a decade. Today, loans are harder to qualify for and typically come with more stringent criteria. This is true even of most assistance programs.
Tighter controls on lending means there are fewer questionable loans. Now consider the housing market. During the meltdown, investors formed and joined groups who would buy properties in bulk. Previous investors found opportunities in commercial real estate such as medium and large apartment buildings. The melt-down investors were buying up houses to turn them into rentals. This created a shortage of homes for sale as homes that normally would change hands now only change occupants. So the supply of homes for sale decreased even as the number of buyers was increasing as more young people want a home of their own.
You may wish for a crash. You may want to wait for a crash. It is most unlikely that you will benefit from a crash, even if there should be one driven by the current economic shutdown. Why? Because if there was a crash, lenders will likely stop lending altogether. No lender wants to lend money and not see it returned in full and with interest.
Rather than wait for the crash, ask about the many programs that exist to help you qualify for a home loan. You can start by contacting me at 760 622 5087 or [email protected]