Ten years ago, the country was hit by the worst crisis in modern history and the horror is far from over! History might repeat itself again if the government stays silent about this. Ten years ago, investment banks and financial institutions collapsed in dramatic way, but back then, in part, the chaos could be blamed to the reckless lending and risky investment that had tanked. The crisis began more than a decade ago, following a culmination of events that led to the market bursting finally in 2008. JP Morgan’s shocking deal that intended to rescue Bear Stearns for $2 per share after the investment bank suffered deep losses. As the first in the row, Bear led the fallout in the financial market. Others would latter follow.
The 2008 wounds are still fresh! So engrossed in our current financial and economic DNA and you would think that the country has learned so many lessons from this horrific time. But have we? It time to revisit the events and uncover the lessons we missed. Certainly, homeownership in most states is on a dramatic upward surge which calls for much attention; most first timers are wondering, is this the right time to buy a home?
Since the great financial crisis, America remains strong. The corporate profits are at record highs, the unemployment rates in the country is at a 17 year low and the stocks market has been stronger in value since the recession period. By far, the country has seen much improvement but the question that most people do not want to face is, could the financial crisis happen again? In 2011, CNN conducted a poll, almost 50% of Americans participated and most of them thought the crisis would happen within a year. Fortunately, they were wrong. But, now most people are convinced that we are headed for a crisis, if we are not already in one.
Take the homeownership rates for example, the only time we see a major rise is in 2017 when a private equity investor group bought hundreds of thousands of the foreclosed homes and rented them back their former owners, but even so, many of them suffered bad credit that they could never buy again.
Prices are rising by the day, mortgage rates are rising too, the market is hot and waiting any longer will do you more harm. If you haven’t bought yet, buy now! 2018 may be the best chance to get yourself a home.
“The challenge for the buyers in the market haven’t changed that much from last year” said Keith Gumbinger, Vice President of Mortgage website HSH.com
In addition to that, the mortgage loans for homes are expected to rise and get more expensive as we go forth. The supply for new housing units will be very tight. Normally, a balanced market tends to have about 6 months of constant housing supply but in December, the market had less than 3 months of supply and the homes were selling 5-6 times faster than the previous year. Competition is getting stiffer, the first time home buyers will struggle to find the home and as long as there will be an inventory shortage in the market, there will always be a bidding war.
On the other hand, labor force participation rate hasn’t yet recovered. The blue collar jobs were particularly hit hard and are yet to bounce back. The recovery doesn’t come easy and so far it has deepened the geographical divide, with the tech giant hubs and cities endowed with natural resources booming. In terms of the incomes, most of the gains are going to the households in the top 10% of the wage scale.
Since 1998, the median household net worth remains adamantly low, even as the households take more loans than never before. However, the good news is that home building is expected to be on the rise and increase with 10% this year. This is expected to feed the much needed 1.3 million new single family homes. To keep up with the population gains, the state needs to do more.
Over the recent past, the home prices have exponentially risen and Experts believe that the home prices will at one time in the near future slow down. The prices can’t go up at the pace that have been in the markets forever, chances are, they affordability has been going down and will keep going down as long as the prices rise, sales will slow down pushing the prices to slow down.
Until then, the prices are expected to rise higher, which only means that it is time to get into the home if you haven’t. Chances are, going forward, people will be priced out of the market leaving room for renting only, in whi