Housing Bubble – Then and Now

Graph

Brief History

Bear with us while we go back in time.  In 2008, we had experienced what most people were going through at that time, a 2008 Housing Crisis.  There was a housing bubble that simply burst.  Not only did it burst, it halted the housing market.  People were losing houses and banks were not lending.  There was an overextension of loan dollars.  Homeowners had a difficult time making the mortgage payment.  Many mortgage lenders did foreclose.  Hope you did not have to go through anything like that.  

You may be asking, why didn’t they just sell their house and pocket the rest?…

And the Answer is

…that as a result of the number of foreclosures that were on the market, many homeowners had negative equity. If they would have sold their house, they would have needed to bring tens of thousands of dollars to the closing table. So, it was not in the cards. Lenders were offering terms and creative financing that really should have never been allowed. Many lenders overextend a borrower knowingly. We at COHFP would like to reiterate that homeowners were not to blame. They were part of a game that was being played. Metaphorically speaking, homeowners were the pawns in a game of chess.
Since 2017, we have seen an increase in home prices. Not a small increase, but significant spikes in home prices. Then, in 2018 and 2019, they continued to soar.

Then, COVID struck.

Interest rates were historically low and Mortgage lenders were offering a Forbearance.   That means that the homeowner could delay paying for their mortgage.  Then, they would get time to pay it back and catch up.  A delay of a mortgage payment due to unforeseen circumstances. With the government shut down and all, it was how lenders could extend homeowners.  Some of which had already been on the verge of losing their homes, even prior to COVID.  Nonetheless, this went on for about 18 months.  Today, there are few mortgage lenders that are offering this Forbearance.  The major problem with Forbearance is that each month; what should have paid up the current month, is now being accumulated as monies owed against a homeowner’s house payment.  Making it very difficult to eventually catch up.  Some lenders are still working on solutions.  Overall, this has been explained so that you can understand the timing.  Lenders have seen it coming from a mile away.  So, they are simply working with the government hoping to not flood the market with foreclosures.  

Meanwhile

The Federal Government was like a printing press for dollars.  With the stimulus payments and all.  Causing the dollar to be devalued.  The only correction is inflation.  It is our opinion that if it wasn’t for COVID, we would have experienced the increase of Foreclosures and some Inflation in 2020.  Today, it is being called the Inflation Crisis of 2023.  

We all know that history repeats itself.  

Below is a graph that shows that there are very similar housing market changes.  We are comparing the 2008 Housing Crisis (bubble) to the 2023 Inflation Crisis..

Graph

https://www.forbes.com/sites/jessecolombo/2020/03/31/why-us-housing-bubble-20-is-about-to-burst/?sh=23e932ad6b76

Furthermore

We should expect small growth from 2022 into 2023.  We have begun to see changes in the market that indicate there will be a down-turn in our housing market and possible an economic crash, globally.  Price reductions and concessions are seen across the board.  Much of the surge of instant equity has evaporated in early 2023.  Our guesstimating that it may take up to 5 years to fully recover.  

We mentioned that we are experiencing an Inflation Crisis.  What is an Inflation Crisis and what does it mean for the homeowner?  Business Insider reported in March, 2023 that Inflation is an increase in the prices of goods and services over time due to an imbalance between demand and supply. Increased costs including wage, government policies, and devaluation of the dollar all play a role in inflation.  What that means for homeowners is that they may be feeling financially squeezed.  With everything going up in price, it is harder to make the mortgage payment.  It’s quite simple.  When you have an increased mortgage, increase cost for food and gas, etc.; it is simply not sustainable.  For anyone going through this type of financial squeeze, It’s not your fault.  Economics out of the control of a homeowner have been difficult to gauge.  A near impossibility…that is unless you are independently wealthy.   If you’re anything like most Americans, you cannot just keep paying more for everything.  Some reports indicate that even with the inflation, we will see a soft landing.  We can only hope that is the case.

Colorado Home Foreclosure Prevention - COHFP

Arrange Free Housing Counsel – If the burden is too much to handle on your own, Colorado Home Foreclosure Protection (COHFP) can help.  We believe that during the initial home consultation, you’ll feel huge relief.  Happiness will start to set in immediately. Reach Out Today.

 

COHFP Can Help

  There will be many solutions that are discussed in person.  You’ll choose what works best.  Many can be put to use immediately, or within 30-days. 

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