Homeowner equity has soared in recent years, raising concerns of a bubble similar to the one that burst in 2008. However, market analysts are confident that the current situation is fundamentally different. Unlike the lead-up to the Great Recession,…
Homeowner equity has soared in recent years, raising concerns of a bubble similar to the one that burst in 2008. However, market analysts are confident that the current situation is fundamentally different. Unlike the lead-up to the Great Recession, where subprime mortgages were readily available to borrowers with weak creditworthiness, today's lending environment is far stricter. This means homeowners currently hold significant "tappable" equity in their properties, but they also went through a rigorous approval process to secure their mortgages. This combination of substantial equity and responsible lending reduces the likelihood of widespread defaults that would trigger a housing market crash.
In simpler terms, homeowners have more financial cushion in their homes today compared to the fragile market conditions that existed before the 2008 crisis. Additionally, stricter lending standards have ensured that borrowers are more likely to meet their mortgage obligations, preventing a domino effect of defaults and foreclosures. While the housing market faces its own set of challenges, experts believe a crash fueled by risky mortgages is not on the horizon.
But #daveramsey doesn't get it.
#homeequity #housingmarket #realestate #2008crash #subprimemortgages #lendingstandards #financialcushion #mortgageapproval #housingcrash
Key Takeaways:
0:00 $1.6 Trillion "tappable" equity
3:37 Low credit score originations
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