Whatever the current state of affairs for house sellers may appear to be, a look back in history warns us that a housing market crash often follows significant price rises.The key is to recall why each catastrophe occurred and look for parallels in today’s market.
In the early 2000s, almost anyone with a pulse could get a mortgage, and house prices skyrocketed.Homeowners who had taken out adjustable-rate mortgages had seen their payments rise by 60% by 2006.As hundreds of thousands of houses went into foreclosure and lenders declared bankruptcy in 2007, the market slowed to a crawl before collapsing.
Most experts believe the US will not suffer a collapse on the scale of the 2008 financial crisis. This is due to several factors, including regulatory changes affecting lending processes.What we call "crashes" aren't always what they seem. But, more often than not, they signal a market slowdown and downward pressure on property prices.
According to history, the property market peaks every 18 years, followed by a small or big crash. It is a normal and expected cycle. When this happens, real estate investors grab the best deals. This way first-time buyers become homeowners.Follow the below tips to prevent a crash in the housing market from hurting you.
Examine your financial situation. Are you having trouble sticking to a budget because you are overextended with debt obligations?To be prepared for emergencies, save enough money to cover three to six months of expenses. You may aim for a larger emergency fund. However, this depends on your comfort level. While trying to be positive, prepare for the worst-case situation.
If you already own a property, consider whether now is the best time to sell. Consider refinancing your current mortgage and take advantage of the present low rates. Even if you have no plans to sell, you should refinance now to take advantage of the current low rates, which will allow you to sit tight and weather any market storms.
If you overpay on a property, you can almost be bankrupt when the market recovers. You are better off searching for less expensive properties if you’d have to watch every penny to make a mortgage payment.Overbuying can be risky. To avoid overextending yourself financially, develop a rigorous home buying budget before you begin home hunting and stick to it.