Everyone remembers the housing crash of 2008 regardless of whether you owned property or not. The news revolving about an economic downturn brings feelings of concern by many that we could be destined to experience the same thing as we did back then. However, we can look at some important data and facts that prove that today’s housing market is not like it was then and one of the key factors is inventory.
Today’s void of supply of newly built homes, existing homes being listed by sellers and distressed properties are far from flooding the market which makes it unlikely to crash. Here is a closer look at each.
Current Homeowners Listing For Sale
Despite inventory increasing these days there are still very few homes on the market for sale. According to data reports from Calculated Risk, inventory for the third week of August is 27.8% higher than last year in 2021 but is 42.6% lower than that of 2019. What this indicates is there isn’t enough housing stock to tip the scales to where home prices fall resulting in a market crash.
Newly Built Homes
New construction is also going at a slower pace than what it was during the last bubble. Ali Wolf, Chief Economist at Zonda, states “It has become a very competitive market for builders where they are trying to offload any standing inventory.” Builders are aligning themselves with the mortgage rate increases and slowing down their production rate where they are being cautious about overbuilding.
Another arena where a glut of inventory can arise is distressed properties which includes both short sales and foreclosures. During the last housing crisis there were many of these due to lax lending standards where today’s market is completely different and more strict. According to ATTOM Data Solutions in 2009 there were 2.8M foreclosure filings whereas in 2021 there were only 151k. Recently the forbearance program was further assistance to help prevent another wave of distressed properties like we saw around 2008.
In conclusion these patterns and numbers prove that supply is not anywhere near where it would need to be for a crash to be in our near future.