3 Reasons Why We Are Not Heading Toward Another Housing Crash

3 Reasons Why We Are Not Heading Toward Another Housing Crash | MyKCM

With home prices softening, some are concerned that we may be headed toward the next housing crash. However, it is important to remember that today’s market is quite different than the bubble market of twelve years ago.

The Belt Team, CEO, Terry Belt says, A difference now compared to the last cycle is that the economy is bustling at levels not seen since the mid/late 1980s and jobs are being created and consumer confidence and real wages are increasing.  The last cycle all of these factors were all trending negative and also amidst a higher mortgage/interest rate environment.

Here are three key metrics that will explain why:

  1. Home Prices
  2. Mortgage Standards
  3. Foreclosure Rates

HOME PRICES

A decade ago, home prices depreciated dramatically, losing about 29% of their value over a four-year period (2008-2011). Today, prices are not depreciating. The level of appreciation is just decelerating.

Home values are no longer appreciating annually at a rate of 6-7%. However, they have still increased by more than 4% over the last year. Of the 100 experts reached for the latest Home Price Expectation Survey94 said home values would continue to appreciate through 2019. It will just occur at a lower rate.

MORTGAGE STANDARDS

Many are concerned that lending institutions are again easing standards to a level that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a quarterly index which,

“…measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

Last month, their January Housing Credit Availability Index revealed:

“Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

FORECLOSURE INVENTORY

Within the last decade, distressed properties (foreclosures and short sales) made up 35% of all home sales. The Mortgage Bankers’ Association revealed just last week that:

“The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.95 percent…This was the lowest foreclosure inventory rate since the first quarter of 1996.”

Bottom Line

After using these three key housing metrics to compare today’s market to that of the last decade, we can see that the two markets are nothing alike.

It is always a good time to buy or sell, and we are here to help! Let’s chat. Give us a call at 703-242-3975 or send us an email at info@thebeltteam.com .

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Where Are Home Values Headed?

Keeping Current Matters” has provided us with some excellent information about where home values are headed. Whether you’re thinking of buying or selling a home in Northern VA – you’ll want to check what they had to say:
Home Values Going Up KCM

“Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey

  • Home values will appreciate by 4.1% in 2015.
  • The cumulative appreciation will be 18.1% by 2019.
  • That means the average annual appreciation will be 3.4% over the next 5 years.
  • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 10.5% by 2019.

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.”

FREE INSTANT Online Home Valuation

———————————————————————————————————————————–In addition to the info from Pulsenomics, we also know the government has indicated it likely that interest rates will rise. In fact, we have seen the FHLMC 30 year rate rise already from 3.84% in May to 4% in June and 4.09% in July. In light of the urgency to buy now, we are holding a special MILLENNIAL EDITION of our “Kiss Your Landlord Goodbye” Seminar.

Homebuyer Seminars Northern VA

Today is a great time to enter the real estate market!  Why throw money away on rent when you can be your own landlord? Freedom rocks. And so does putting money in your OWN pocket instead of your landlord’s!  

Mortgage rates are low (for now!) and you may even be able to pay less by owning than renting. Not sure how the process works? We’ve gathered these local experts to share their knowledge with you:

  • Aaron Gagnon, Loan Officer, Apple Federal Credit Union
  • Brad Pace, Loan Officer, EverBank
  • Chris Melnick, Owner, Double Eagle Title
  • Several local millennials who recently bought their first home
  • The Belt Team, nationally recognized Top 100 Team with Keller Williams Realty

Next Class Scheduled: Sept 30th 6:30-8PM in McLean

Register at: www.TheBeltTeam.com/Classes  (Register FREE before 9/10)

Parents: Are YOU your adult child’s landlord? Send them to our class. Invest in their future!

Here are some of the topics we will discuss:

  • Could I actually pay less by owning than renting?
  • How much money do I need?
  • Do I qualify for a mortgage?
  • What would my payment be?
  • Mistakes to avoid.
  • What about inspections?
  • Search tips & tricks.
  • Best apps to use.

Questions? Call Terry Belt & The Belt Team at (703) 242-3975

Northern VA Home Sales Down, Prices Up in First Quarter of 2014

First quarter statistics have been released. In most areas the number of homes sold in the first quarter of 2014 was down compared to first quarter 2013. However, in most areas, prices rose. Only 3 areas saw an increase in home sales: Dunn Loring, Centreville & Springfield. In every other Northern Virginia city, home sales declined year over year. On the other hand, prices were up in all cities except three: Ashburn, Great Falls & McLean. The other areas saw average prices rise from 2.1% to 10.2%. (See chart below for sales & prices in each city.)

Call (703) 242-3975 if you would like a zip code or neighborhood analysis.

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Northern VA Home Sales

Northern VA 2013 Sales 2014 Sales Yr Over Yr Avg SP 2013 Avg SP 2014 Yr Over Yr
Alexandria 951 867 -9% $451,880 $488,773 8%
Arlington 536 486 -9% $570,179 $585,200 2.6%
Ashburn 331 253 -24% $466,963 $462,281 -1.0%
Burke 96 114 19% $415,793 $426,403 2.6%
Centreville 173 182 5% $354,407 $372,015 5.0%
Chantilly 166 144 -13% $429,711 $463,140 7.8%
Dunn Loring 2 4 100% $882,500 $834,000 -5.5%
Fairfax 414 344 -17% $463,841 $488,611 5.3%
Falls Church 282 251 -11% $466,898 $476,777 2.1%
Great Falls 55 25 -55% $1,248,293 $1,108,758 -11.2%
Herndon 138 124 -10% $419,152 $447,186 6.7%
McLean 143 128 -10% $1,135,881 $931,091 -18.0%
Oakton 54 48 -11% $509,763 $562,012 10.2%
Reston 194 190 -2% $427,210 $441,990 3.5%
Springfield 208 232 12% $395,386 $428,874 8.5%
Sterling 211 194 -8% $349,394 $379,676 8.7%
Vienna 140 129 -8% $718,021 $733,301 2.1%