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<\/a>Unlike the crash of 2008, today\u2019s lending environment is far more regulated. Buyers are generally more qualified, with stronger credit profiles and larger down payments. Inventory continues to be historically low, and demographic demand (highlighted by Millennials entering peak homebuying years) is keeping upward pressure on prices.<\/p>\n\n\n\n
That said, increased interest rates over the past year have cooled affordability, causing pricing corrections in some overheated markets. While a nationwide crash seems unlikely in the near term, there are several regional markets that could see sharper declines, especially where prices have far outpaced income growth.<\/p>\n\n\n\n
Real Estate Cycles<\/h2>\n\n\n\n
According to Ted Nicolais, there are defined cycles to the real estate market. Nicolais maps out the cycles as follows:<\/p>\n\n\n\n
The first phase<\/strong> is the \u201crecovery.\u201d\u00a0 Home prices are at the bottom, and demand increases.\u00a0 Available real estate units decrease while economic activity increases.<\/p>\n\n\n\n The second phase<\/strong> is the \u201cexpansion.\u201d\u00a0 Housing inventories dwindle, there is little is available to buy, and finding a rental becomes difficult.\u00a0 Until new\/additional inventory is added, price growth accelerates. During a real estate boom, people are willing to pay escalating prices because of limited inventory, and the prospect of \u201cfuture growth\u201d<\/p>\n\n\n\n Phase three<\/strong> is \u201chyper supply.\u201d\u00a0 When housing demand begins to be satisfied, inventories fist stabilizes and then swells.\u00a0 Price growth slows.\u00a0\u00a0<\/p>\n\n\n\n Phase four <\/strong>is the \u201crecession.\u201d\u00a0 Occupancy rates and home prices fall.\u00a0<\/p>\n\n\n\n Things to consider:<\/p>\n\n\n\n The Bottom Line<\/strong><\/p>\n\n\n\n It\u2019s true, the housing market does feel different than it has over the last few years. But it\u2019s unlikely that we are headed for a full blown bubble bust like we saw in 2008. And given the indicators, housing will continue to cycle through the expansion phase in the near future.<\/p>\n\n\n\n Housing has been in the midst of a market adjustment from the extremes of recent years, which is not a full-blown bubble burst. For buyers, this could mean more negotiating room. For sellers, pricing strategy will be key in the months ahead. Staying informed and working with an experienced agent can help you navigate whatever comes next.<\/p>\n\n\n\n\n