I’m getting more and more questions from my clients asking “are we going to have another housing crisis?” The truth is I’m not an economist; I’m a Loan Originator who is a student of the housing market. Here is what Warren Buffet said about it at the end of April.
There are several reasons I believe Warren Buffet is correct. The lending guidelines and requirements have changed considerably since the days of the loosy goosy lending practices of 2005. The industry is making better decisions and implementing more stringent requirements from borrowers. This has resulted in better performing loans. Zillow just did a study on Housing Affordability, I found this very interesting, from 1985-2000 the average American spent 21 cents out of every dollar they made on their mortgage and today they spend 15 cents out of every dollar. During the same time period the average American spent 26 cents out of every dollar to rent a home and today they spend 30 cents. There are other factors that have stabilized the housing market, for instance reduction of riskier products, etc. At the end of the day once the housing market inventory levels stabilize somewhat we should see a tamer appreciation rate.
I’ve always said you don’t make money in real estate when you sell; buying at the right time is the key. Here is the Home Expectation Survey for the 2nd quarter of 2016.
The bottom line: If you find a home that fits your family’s budget and are willing to buy, let’s sit down and create a mortgage that fits your family’s short and long term financial needs. Your going to pay someones mortgage. Why shouldn’t it be yours?