Investors who survived the Great Recession of 2008 are understandably concerned about the state of the US housing market. Probably unfounded.
There are two most obvious differences between the 2008 housing crisis and today’s housing market. First, the recession that accompanied the housing market crash was fueled by bad debt. At the time, the George W. Bush administration joined forces with Fanny and Freddie Mac to launch the “Everyone Deserves a Home” (subprime) mortgage campaign for people. Unfortunately, those people eventually showed that they were unable to repay the loans.
The banks that scooped up these mortgages under the belief that they were sound because Fanny and Freddie were backing them also made a mistake. The government has certainly learned from its experience and new regulations have been introduced making it much harder to get a mortgage in 2022.
The second factor is the number of variable rate mortgages (ARMs) owned in 2008. ARMs are loans whose interest rates are adjusted based on changes in market interest rates and are much less predictable and risky, especially during recessions such as: 2008. The year the housing market crashed, ARMs had a much higher share than they do today. The Washington Post reported that more than 30% of loans were ARMs in 2008, but today, according to NBC, ARMs make up only 8% of mortgages.
Millionaire for over 35 years Grant Cardon He has invested in real estate and claims he has never lost money on multifamily real estate investments.Since its founding cardon capital In 2016, we raised over $900 million across 21 funds from over 11,000 accredited and non-accredited investors. Cardone’s real estate portfolio includes approximately 12,000 apartment units across 36 multifamily homes and over 235,000 square feet of commercial office space. He sees the current housing market as volatile as it was in 2008 as an investment opportunity.
“We believe we are entering the best real estate market opportunity since 2008. Home buyers were pushed aside as the Fed raised interest rates. “Now is a great time to buy a home 15% to 20% cheaper than it was at the beginning of the year,” says Cardone.
Finding what to buy is a more important issue. According to Realtor.com, the supply of homes for sale has been hit by the pandemic as he rose 27% at the beginning of September, but current inventories remain 43% lower than he was in 2019. insufficient to offset the period of housing shortages.
chief economist Redfin Co., Ltd.Darryl Fairweather recently told Newsweek that during a recession, house prices would fall between 2% and 4%, and if a crash happened now, the recession would stay in that range.
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