Housing Market: Another Gigantic Difference Between 2008 and 2018

Dated: 08/16/2018

Views: 15

Housing Market: Another Gigantic Difference Between 2008 and 2018
  
First Time Home Buyers, For Buyers, For Sellers, Housing Market Updates, Move-Up Buyers

Some are attempting to compare the current housing market to the market leading up to the “boom and bust” that we experienced a decade ago. They look at price appreciation and conclude that we are on a similar trajectory, speeding toward another housing crisis.

However, there is a major difference between the two markets. Last decade, while demand was being artificially created by extremely loose lending standards, a tremendous amount of inventory was coming to the market to satisfy that demand. Below is a graph of the inventory of homes available for sale leading up to the 2008 crash.

A normal market should have approximately 6 months supply of housing inventory. As we can see, that number jumped to over 11 months supply leading up to the housing crisis. When questionable mortgage practices ceased, and demand dried up, there was a glut of inventory on the market which caused prices to drop as there was too much supply and not enough demand.

Today is radically different!

There are those who believe that low mortgage rates have created an artificial demand in the current market. They fear that if mortgage rates continue to rise, some of the current demand will dry up (which is a possibility).

However, if we look at supply again, we can see that the current supply of homes is well below the norm of 6 months.

http://files.simplifyingthemarket.com/wp-content/uploads/2018/08/14155112/20180816-STM-ENG2-1024x768.jpeg" alt="" width="650" height="488" />Bottom Line

We will not have a glut of inventory like we did back in 2008 and home values won’t come tumbling down. Instead, if demand weakens, we will return to a normal market (approximately a 6-month supply) with historic levels of appreciation (3.6% annually).

Blog author image

Paul Franklin

A Straight Shooter... Making personal connections is so valuable. Like any other important relationship in your life, the one you build with a real estate professional should have a foundation of t....

Latest Blog Posts

Home Sales Expected to Continue Increasing in 2019

Tuesday August 28th, 2018  For Sellers, Housing Market Updates, Move-Up BuyersFreddie Mac, Fannie Mae, and the Mortgage Bankers Association are all

Read More

The Net Worth of a Homeowner is 44x Greater Than A Renter!

Monday August 20th, 2018  First Time Home Buyers, For Buyers, Move-Up Buyers, Rent vs. BuyEvery three years, the Federal Reserve conducts their Survey of

Read More

Supply & Demand Will Determine Future Home Values

 Thursday August 9th, 2018  For Buyers, For Sellers, Housing Market Updates, PricingWill home values continue to appreciate throughout 2018? The answer is simple: YES!

Read More

Housing Market: Another Gigantic Difference Between 2008 and 2018

Thursday August 16th, 2018  First Time Home Buyers, For Buyers, For Sellers, Housing Market Updates, Move-Up BuyersSome are attempting to compare the current housing

Read More