Why We're Not Headed for a Housing Market Crash
Today’s housing market is nothing like the housing crash in 2008. Let’s connect to discuss the reasons why it’s different.
Two ways to benefit from the 2022 housing market that is NOT headed for a crash.
Interest rates are at or near all-time lows, and the housing market is robust in most markets. Here are two ways to benefit:
1- Homeowners: Invest in Your Home and Finance the Improvements
From an investment standpoint, if you plan to be in the house less than five years, think about whether you’ll recover the investment on a resale. For example, kitchen upgrades and modest outdoor living areas tend to be great investments. On the other hand, “lifestyle enhancements” (like swimming pools) only make sense if you plan to be in the house for 10+ years. That’s because you may not recover the investment. In either case, home improvements have an extra perk: they could enhance your general enjoyment of life and family! It currently makes sense to finance your home improvements because the cost of financing is so low.
The main question to ask yourself when it comes to paying cash vs. financing is: can you earn more than the cost of the funding if you invest your money instead?
2- Homebuyers: Be Prepared for Bidding Wars
Housing inventory is low, and you’ll likely experience a bidding war on a home you like if/when you find it. That’s one reason why it’s so important to get a solid loan approval (fully underwritten) before you go house-shopping. This may enable you to waive the “financing contingency” on your purchase offer. If you go that route, you may want to get approved for a low-down-payment loan if you need to bid above the asking price and the appraised value doesn’t match up. For example, if a home sells for $500,000 and it only appraises for $475,000, you’ll need to make up the $25,000 difference yourself or get approved for a “higher Loan-to-Value” (low down payment). That’s because the lender will only use the lesser of the purchase price and the appraised value.
Contact me for more information or to evaluate your financing options!
