You might recall the 2008 housing crash, even if you weren’t a homeowner. If you’re concerned about a repeat, there’s good news. Today’s housing market differs significantly from 2008’s.
First, a key distinction of the current market is the current shortage of homes for sale. This leads to undersupply, which is not like the oversupply of 2008. To trigger a market crash, there would need to be an excess of homes for sale. The current data does not support this.
Next, housing supply primarily comes from three sources. The first is homeowners choosing to sell. The second is newly constructed homes. The third is distressed properties, like foreclosures and short sales. Let’s examine today’s housing inventory to see how it differs from 2008’s.
Homeowners Choosing to Sell – To begin, housing supply increased from last year, but remains low. The current month’s supply is below the usual level. Compare the latest data to 2008. There’s only about a third of the available inventory today. This means there aren’t sufficient homes available to cause home values to decline. For a crash like 2008’s to happen? There would need to be a huge increase in inventory. Add very few buyers to that. This is not the case in the current market.
Newly Built Homes – 14 years of underbuilding is a major reason for today’s low inventory. Builders have not constructed enough homes for year. This resulted in a significant supply shortage in the current market. While there has been a recent increase, it won’t create an oversupply overnight. The gap is too substantial to fill rapidly. Thus, builders are cautious about avoiding overproduction, as seen in 2008.
Distressed Properties – During 2008, lax lending standards led to foreclosures. Today, stricter standards mean more qualified buyers. As standards tightened and buyers became more qualified, foreclosure numbers decreased. In 2020 and 2021, there was a foreclosure moratorium and a forbearance program. These prevented a repeat of the 2008 foreclosure wave. The forbearance program was a game-changer. It offered options like loan deferrals and modifications. Data shows that four out of five homeowners exiting forbearance have either paid in full or arranged repayment plans, preventing foreclosure. Consequently, a foreclosure wave is unlikely.
In conclusion, housing inventory remains insufficient for a market debacle. Experts predict this situation will persist as housing inventory indicates no impending crash. What does this mean for you? It’s still a safe and favorable time to act on your real estate dreams. To start your home buying or selling journey today, visit SurterreProperties.com.
