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When Did the Housing Bubble Burst?

Since the early 2000s, everyone from analysts to experts predicted the burst of the housing bubble. So, even contestants on a game show could have trouble quickly answering the question regarding the date. The bubble didn’t actually burst until late 2007. Typically, a burst in the housing market occurs in certain states or regions, but this one was different. It happened across the entire US.

 
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 What Lead up the 2007 Housing Bubble Burst?

Traditionally, the housing market does show signs that it’s in a bubble and headed for a little trouble. For example:

  • Starts with an increase in demand
  • The increase is coupled with a limited supply of properties on the market
  • Spectators, who believe in short-term buying and selling (known as flipping), enter the market. Other factors such as loosened credit underwriting standards may bring in borrowers who couldn’t afford property could be included in the increase.
  • Demand increases even more
  • The market undergoes a shift. Demand decreases or remains the same as the housing market sees an increase in supply.
  • Prices Drop
  • Housing bubble bursts

The same scenario occurred leading up to late 2007. While the housing market grew in the bubble, property was often selling at overvalued prices from 2004 to the year before the burst. The property price actually peaked in the early months of 2006. As the year went on, prices began declining along with sales. Although prices hit a low in 2012, the largest dip happened in 2008.


young couple standing in front of a homeThe Other Side of the Bubble

Of course with anything there is a bright side and the housing bubble definitely has its bright side. Unlike other financial markets like the stock market, the housing market is traditionally not prone to bubbles or bursting bubbles. The reason for this is because there is such as large cost associated with owning property.

 

Another bright side includes buyers. Buyer confidence assists any recovery. As consumers become more confident, they typically choose to stop renting house or apartments and start owning property. Ultimately, any bubbles in the housing market aren’t possible when Americans are enthusiastic and optimistic about the housing market. Although people may not be ready to declare the housing marketing totally cured of the burst, more Americans are taking a serious look at owning property. This entails becoming credit worthy and understanding what it takes financially to buy, maintain and keep property.

 

Want to learn more about the home buying process now that the bubble is gone and it's a buyer's market? Download "The Get Mortgage Ready Guide " and get started.


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5 Reasons Not to Skip Your Home Inspection

You found a house you love—hooray! But with lots of other buyers breathing down your neck, you feel like you need to act fast. To make your offer more attractive to the seller, you might be tempted to skip your home inspection, but here are five good reasons not to! 1.) Not all problems are obvious. It’s easy to spot issues like a crack in the sink or a broken light fixture. But do you know how to recognize foundation problems, termite infestations, outdated wiring, or sewer system problems? Trained home inspectors do and taking the time to have them go over the entire property before you sign the papers can prevent you from buying a headache instead of a home. BOTTOM LINE: The great thing about an inspection is that if you see major problems you’re unwilling to take on, you can change your mind and walk away. 2.) You may not be able to afford the repairs. If you’re like many new homeowners, you may not have much set aside to pay for needed repairs after saving up for your down payment and closing costs. While you may not mind waiting a bit to repaint or update appliances, waiting on problems like leaky roofs, broken plumbing, or infestations will only make them worse, and some issues, like broken furnaces, may need to be repaired right away. BOTTON LINE: You don’t want to go deep into debt to keep your home safe and comfortable. Instead, it’s worth negotiating with the seller to pay for repairs. If they refuse, you can simply walk away. 3. Some problems can make it harder to insure the home. Getting home insurance is essential because lenders need to see an insurance policy before you can close on your home—and of course, you’ll want to have your home protected in case anything goes wrong. However, some companies may decide that your home’s older electrical systems, plumbing, or building materials make it too risky to insure. BOTTON LINE: If essential updates are needed, the only choices are to ask the seller to pay for them, pay for them yourself if you can afford it, or walk away from the deal. 4. Serious issues can affect the resale value of the home. Your home is probably the biggest investment you will ever make. However, if it has major problems, instead of building your wealth, it could turn into a lousy investment that threatens your financial well-being. BOTTON LINE: While a home inspection typically costs a few hundred dollars, it’s an excellent investment in your peace of mind and financial health. 5. Some problems can threaten your family’s health or even your life. This sounds scary, but it’s no exaggeration. Issues like lead paint, black mold, radon (an odorless radioactive gas), or carbon monoxide leaks can cause serious and sometimes fatal health problems. BOTTON LINE: These issues are also easy to miss without a professional home inspection, and it’s simply not worth taking the risk. While it’s not easy to compete with other buyers who are bidding for the house you want, home inspections are one area where you don’t want to cut corners. To protect your physical, financial, and mental health, there’s no substitute for a professional home inspection.

6 Tips on How to Buy a House in Today's Market

Buying a home may be the American dream. But with escalating home prices, rising interest rates, low inventory, and inflation, as a first-time buyer, you may be wondering if that dream is out of reach.

Let's Talk FHA Loans

  If apartment living is getting old, or you've outgrown your parents' basement and house rules, you may be thinking about buying your own place. For this reason, you may be interested in learning about home loans that offer low and no-down payment options and have flexible lending requirements. One of these is the FHA loan. Let's take a closer look. 

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