What we are not in is a depression. I am not intending to be flippant or insensitive to the plight of many in horrendous situations but consider this: history will show that the times we are experiencing most certainly are challenging, albeit devastating for some, but pale in comparison to what we have endured as a nation in the past.
As we move forward in 2009, it is important for all to take stock and gather some perspective. Depending on who you listen to, the experts say we may be half-way through this present recession. Economic historians observe, that after every valley (recession) we always see a recovery climb following
Here are three factors that have or will come into play:
Liquidity: Contrary to many reports, borrowers that are responsible are able to secure financing. In fact, rates are historically low right now.
Employment: This is obviously a major concern for potential borrowers. Most believe that unemployment will reach 8% to 9% in 2009. My home province of Quebec that the unemployment rate reached 14% in the early 1990s. Thankfully, the job market did not remain in that territory for an extended period. Keeping things in prospective – the unemployment rate during the great depression was 25%. Consumer confidence may take some time to return.
Affordability: The peak of 2005’s market pushed affordability out of reach of many. The correction we’ve seen has brought much needed affordability back into the equation.
What you need to know… and why demand IS coming!
- Due to the recent financial collapse, developers are not able to access the monies required to build multi-home or condo developments. The impact of situation will result in a building shortage within the next three years.
- Even though the mortgage industry has tighten and some people will not qualify for a loan, the overall health of the housing market will be improved due to the stringent regulations.
- People are living longer, for most, that’s a good thing! As Americans live longer lives their housing needs will affect the supply.
- Prior to August 2007 The availability of “free” purchase money and minimum standards for investors to jump in was out of control. The market is in the process of correcting itself and both the unqualified buyer and the amateur investors will be few and far between. Financing is available and for qualified buyers.
As I look at all of these indicators, I believe that within the next three years we will have a housing shortage! For many the current real estate market is a chance for many to take advantage of the possibilities this moment in time affords.
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