{"id":4317,"date":"2023-02-09T12:31:05","date_gmt":"2023-02-09T12:31:05","guid":{"rendered":"https:\/\/twolakeshomes.com\/why-todays-housing-market-isnt-headed-for-a-crash\/"},"modified":"2023-02-20T20:49:25","modified_gmt":"2023-02-20T20:49:25","slug":"why-todays-housing-market-isnt-headed-for-a-crash","status":"publish","type":"post","link":"https:\/\/twolakeshomes.com\/2023\/02\/why-todays-housing-market-isnt-headed-for-a-crash\/","title":{"rendered":"Why Today\u2019s Housing Market Isn\u2019t Headed for a Crash"},"content":{"rendered":"

67%<\/a> of Americans say a housing market crash is imminent in the next three years. With all the talk in the media lately about shifts in the housing market, it makes sense why so many people feel this way. But there\u2019s good news. Current data shows today\u2019s market<\/strong><\/a> is nothing like it was before the housing crash in 2008<\/strong>.<\/p>\n\n

Back Then, Mortgage Standards Were Less Strict<\/strong><\/h4>\n

During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Banks were creating artificial demand by lowering\u00a0lending standards\u00a0and making it easy for just about anyone to qualify for a home loan or refinance an existing one.<\/p>\n\n

As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.<\/p>\n\n

The graph below uses\u00a0data<\/a>\u00a0from the\u00a0Mortgage Bankers Association<\/em>\u00a0(MBA) to help tell this story. In this index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is.<\/p>\n\n

<\/a><\/p>\n\n

This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards have helped prevent a situation that could lead to a wave of foreclosures like the last time.<\/p>\n\n

Foreclosure Volume Has Declined a Lot Since the Crash<\/strong><\/h4>\n

Another difference is the number of homeowners that were facing foreclosure when the housing bubble burst. Foreclosure activity has been lower<\/a> since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses data<\/a> from ATTOM to show the difference between last time and now:<\/p>\n\n

<\/a><\/p>\n\n

So even as foreclosures tick up, the total number is still very low. And on top of that, most experts don\u2019t expect foreclosures to go up drastically like they did following the crash in 2008. Bill McBride, Founder of Calculated Risk<\/em>, explains<\/a> the impact a large increase in foreclosures had on home prices back then \u2013 and how that\u2019s unlikely this time.<\/p>\n\n

\u201cThe bottom line is there will be an increase in foreclosures over the next year (from record level lows), but there will not be a huge wave of distressed sales as happened following the housing bubble<\/strong>. The distressed sales during the housing bust led to cascading price declines, and that will not happen this time.\u201d<\/em><\/p>\n

The Supply of Homes for Sale Today Is More Limited<\/strong><\/h4>\n

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically.\u00a0Supply\u00a0has increased since the start of this year, but there\u2019s still a shortage of inventory<\/a> available overall, primarily due to years of underbuilding homes.<\/p>\n\n

The graph below uses\u00a0data<\/a>\u00a0from the\u00a0National Association of Realtors<\/em>\u00a0(NAR) to show how the months\u2019 supply of homes available now compares to the crash. Today, unsold inventory sits at just 2.7-months\u2019 supply at the current sales pace, which is significantly lower than the last time. There just isn\u2019t enough inventory on the market for\u00a0home prices\u00a0to come crashing down like they did last time, even though some overheated markets may experience slight declines.<\/p>\n\n

<\/a><\/p>\n\n

Bottom Line<\/h3>\n

\nIf recent headlines have you worried we\u2019re headed for another housing crash, the data above should help ease those fears. Expert insights and the most current data clearly show that today\u2019s market is nothing like it was last time.<\/p>","protected":false},"excerpt":{"rendered":"

67% of Americans say a housing market crash is imminent in the next three years. With all the talk in the media lately about shifts in the housing market, it makes sense why so many people feel this way. But there\u2019s good news. Current data shows today\u2019s market is nothing like it was before the […]<\/p>\n","protected":false},"author":1,"featured_media":4318,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[65,66,107,82,84,79,108,106,104,70,64,68,105,71,67,62,63],"_links":{"self":[{"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/posts\/4317"}],"collection":[{"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/comments?post=4317"}],"version-history":[{"count":1,"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/posts\/4317\/revisions"}],"predecessor-version":[{"id":4529,"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/posts\/4317\/revisions\/4529"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/media\/4318"}],"wp:attachment":[{"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/media?parent=4317"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/categories?post=4317"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/twolakeshomes.com\/wp-json\/wp\/v2\/tags?post=4317"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}