Not a Crash: 3 Graphs That Show How Today’s Inventory Differs from 2008

Understanding Today’s Housing Market: Why We’re Not Heading for a Crash

If you were around during the 2008 housing crisis, you know how impactful it was. It’s understandable to worry about another crash, especially with the current headlines suggesting turmoil in the market. However, rest assured, today's housing market is different from what it was back then.

Why Experts Don’t Expect a Crash

For the housing market to crash like it did in 2008, we would need to see a significant oversupply of homes, and that’s not what’s happening now. Instead, we’re seeing an undersupply. Here’s a closer look at why this is the case.

1. Homeowners Deciding To Sell

While there has been a slight increase in the number of existing homes for sale compared to last year, the overall supply is still very low. Nationally, the months' supply of homes is well below the norm and far below the levels seen during the 2008 crisis. Simply put, there aren't enough homes on the market to cause prices to drop significantly.

2. New Home Construction

There’s been a lot of talk about new homes lately. Are homebuilders overdoing it? The short answer is no. If you look at historical data, you’ll see that builders were overbuilding before the crash, but since then, they’ve been very cautious. The construction levels now are more about catching up with demand rather than creating an oversupply. Builders remember the Great Recession too well and are wary of repeating past mistakes.

3. Distressed Properties

Foreclosures and short sales were a huge part of the last housing crisis. Back then, lending standards were much looser, allowing many people to take on loans they couldn’t afford. Today, lending standards are much stricter, leading to more qualified buyers and fewer foreclosures. Even with recent headlines about a rise in foreclosures, we’re still below normal levels seen in a typical year.

What This Means for You

The fear of a housing market crash is largely unfounded given the current data and expert opinions. Inventory levels are too low to cause a significant drop in home prices.

Key Takeaways:

  • Supply and Demand: There are more people looking for homes than there are homes available. This fundamental economic principle supports stable, if not rising, home prices.
  • Qualified Buyers: Tighter lending standards mean that those who are buying homes are financially more stable, reducing the risk of foreclosures.
  • Builder Caution: Homebuilders are not overbuilding; they’re catching up to meet the demand, which helps prevent an oversupply.

Bottom Line

Despite the headlines, the housing market today is not on the brink of a crash. The conditions that led to the 2008 crisis are not present now. Inventory remains low, and demand continues to be strong, making a repeat of the past highly unlikely. If you’re considering buying or selling, it’s still a good time to make a move. Let’s connect to discuss how you can navigate today’s housing market with confidence.

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