a source of strength for homeowners today

Brent sheds light on how your home equity can provide relief for homeowners facing financial hardship.

More of a reader? Catch the video transcript below!

We’ve all been hearing the news about inflation, layoffs, interest rates going up, and a potential recession looming.

Unemployment numbers have gone up and home values in some areas have gone down — and so the question is, “Is this going to be a crash like what happened in 2008?”

The good news is, all the experts are saying no. One of the big reasons behind that is the amount of home equity that we’re seeing on average. So, the average homeowner has something like $300,000 in equity in their home.

What happened in 2008?

Let’s take it back to the 2008 crash. Home prices, just like anything else, are determined by supply and demand, and there was an oversupply in the housing market.

When you have too much supply and too little demand, you have to reduce your prices in order to get someone to buy. What was happening is the lenders were taking back homes in foreclosures, and homeowners were just kind of walking away from them and letting the bank have them because they tended to owe more on them than they were worth. The homeowners had low or negative equity in a lot of those situations, and that had to do with a lot of sketchy lending practices that existed back then.

Are we headed for another market crash?

What’s different about today that we didn’t see in 2008? Record levels of equity.

So, if end up losing my job and I have $300,000 in equity in my home, it’s really unlikely that I’m going to toss the keys to the bank and walk away from it. I would sell it and try to get as much of that $300,000 in my pocket as possible, right?

Even as layoffs occur and people can no longer afford their homes, typically not everyone is going to be laid off and put their homes on the market at the exact same time. So, if something like this were to occur, it would be a slow drip of properties on the market rather than a flood.

Another thing that’s different about today’s market environment is that the risk of foreclosure has been decreasing. After what happened in 2008, the government realized that letting the lenders go crazy, foreclose on everybody, and let the invisible hand of the marketplace do its damage wasn’t the best idea.

When the pandemic hit, the government knew they needed to prevent a flood of supply to the market like what happened in 2008. So, they put a foreclosure moratorium in place that required lenders to offer forbearance programs to modify the terms of the loan and keep people in their homes.

How do I keep my home if I get laid off?

If you’re facing a layoff or job transition today, it can be very scary and nerve-wracking to not be able to make your mortgage payment; however, there are options at your disposal.

Talk to your lender and your local real estate agent to see what your best option is — whether that’s forbearance, loan modification, or selling your home to get your equity.

If you’re going through this right now, reach out to us and we can point you to the right resources to try and keep you in your home.

That’s it for me today, guys — see you in my next blog! 👋🏼