Source: https://youtube.com/shorts/FjHTZU6kyAw

In the past few weeks, Delaware home prices have been rising. Mortgage prices continue to be unaffordable. What’s next? People may be unable to afford homes, and the housing market activity will halt. There will be an oversupply of homes with no one buying them, and it’s just a matter of time before the housing market prices will dive. Isn’t this the picture we had during the Great Recession of 2008?

People are anxious that we will witness the same situation during the Housing Market Crash just over a decade ago. You can see people posting these sentiments in the news and on social media to stir up conversations. And you’re reading these because maybe you’re feeling the same urge to know the answer: Is the Delaware housing market going to crash?

We’re glad you are here. There’s no need to worry since this is nothing like the 2008 Housing Market Crash. And here’s why. 

The Real Issue of the 2008 Market Crash

In 2008, what we had was not a home price issue. What we had back then was unregulated lending issues. Here’s the story.

We had people having home deals without verification or home inspections. People got approved with ninja loans even if they had 480 credit scores, and they got adjustable rate mortgages thinking the US economy would always go up and they would never lose their jobs. In other words, people not qualified for even one mortgage ended up closing home deals for not just two but three or more. 

At this point, the market and banks started to notice that things were going awry. So, when these unregulated lending practices went way out of control, banks raised the interest rates on the people actively paying their adjustable mortgages. And that event began the downward spiral of the housing market of 2008.

Hence, the people who shouldn’t have a mortgage no longer afford their new mortgages. So, they tried to sell. However, they could not sell because no one could buy due to increased interest rates. Hence, the housing market prices went into a deep dive. 

And since there are way too many mortgages in effect that are way beyond the means of the homeowners, people continued to default in paying, and the housing prices continued to plummet. More people defaulted, housing prices continued to go down, and it happened week after week. And it popped. The housing market of 2008 just crashed rock bottom.

Today, The Exact Opposite

On the other hand, we have the exact opposite issue right now. We have a home supply issue. Yes, the interest rates make mortgages expensive mainly to slow down the demand for home buying to rebalance the supply of homes. But also, due to high inflation, home builders have not overbuilt homes either.

In other words, not enough homes have been built, and not enough is up for sale. Not enough homes are being listed in neighborhoods. The supply did not outpace the slowing of buying demand. So, the market did not go out of control.

In addition, lenders have strict lending standards today and are heavily regulated, which is a lesson they learned from the 2008 Housing Market Crash. So, for the past decade, the people with a mortgage can afford it and are qualified and verified. So, no more ninja loans!

And, we have so many buyers via cash on the equity they’ve gained over the last few years, and people are just retiring. Just because you can’t afford it now in your situation doesn’t mean other people can’t afford it. In short, people have money! 

Closing Thoughts

A lot of people are buying Delaware homes today, and the market is not going to crash. Houses haven’t been overbuilt, and lenders have strict lending standards. Put those two trends together, and you have a housing market unlikely to crash soon.

So, if you are convinced and ready to put your fear aside and get your hands on buying a Delaware home, now is the best time. Reach us today at Loft Realty, and together, let’s buy you your next dream home here in Delaware.