There are a lot of concerns about the housing market. And the market is changing what I call the real estate Titanic ship is turning. Furthermore, the stock market has gone down for seven weeks in a row. It’s the end of May 2022. And the Dow Jones and S&P and everything is down inflation is at 8%. And the interest rate that used to be $2.5678 months ago, is now at 5%. And this adds to the fuel the concern and confusion about the real estate housing and the commercial markets. If you look at some media, if you listen to some media and other people on YouTube or Twitter, a lot of people have a negative view of the real estate market and they think it’s crashing. But let’s look at the numbers. And then we can decide where it’s headed. So yes, what I call the real estate Titanic ship is turning. It’s not sinking, but it is turning. 

Yes, it is true that sales have gone down and part of it is because there’s a shortage of supply. In the last few months inventory has gone up. There’s more inventory than before. And yes, interest rates have gone up. And that has put a lot of buyers out of reach to buy homes. So those are legit concerns. And those are legit facts. But that does not mean there’s a recession coming despite the inflation, despite the higher interest rate, despite a slowdown in home sales, which is a very slight slowdown, maybe one or 2%. Throughout California, at least in Orange County, it’s one or 2%, one thing has not changed, the prices are still going up. They have slowed down in the rate at which they go up. But they’re even with the higher interest rate, higher inflation, and low Dow Jones numbers, prices are still gonna go up which tells you something about the buyer demand buyers still want homes. The other reason there’s so much confusion and uncertainty is that a lot of the consumers rightly so are comparing or visualizing or reminiscing on what happened in the 2007-2008 housing bubble and housing crash. 

That was a big one, this scenario is totally different. That’s why they’re saying there is no housing bubble. And there is no housing crash in 2008, it was very easy to get a loan and it was very easy to get get a house as far as qualifications. There is still a shortage of homes, you hardly see any signs and homes that used to sell, of course, a few months ago at least in Anaheim Hills used to sell within seven days, what we call seven days on the market, and now maybe taking 12 days on the market. So it’s still a very strong market, fewer supplies, not an overall supplies as we compare to 2008. That’s also a big difference. And that’s probably why we may not have a recession or housing bubble because of the shortage of supply. And because of the higher interest rate buyers are still buying homes or flying out the door. Yes, there may not be 10 offers that we used to get in 2021. We aren’t getting multiple offers, or even if you get one offer, it’s at market price or above the market price. So buyers are still buying so there may not be a bubble as long as buyers keep buying under these conditions. 

Let’s compare that to 2021. In 21, there were only 39,000 foreclosures. So if you look at the numbers, $1.8 million foreclosures to 39,000 foreclosures, and this is nationwide. And some of it may be due to people getting behind or foreclosures of COVID-related issues, or forbearance, but that’s a very small number compared to the 1.8 number, and one of the major differences from 2008. And now if there is one word why there may not be a crash, at least in the next one or two years is because of this big word called equity in 2007. Eight people borrowed and borrowed on borrowed that pretty much zero equity. Today, there is tons of equity. Historically, there has never been so much equity in houses than ever before in the past.