Data to prove why the housing market won’t crash like in 2008.

Whether or not you owned a home in 2008, you likely remember the housing crash that took place back then; and news about an economic slowdown happening today may bring those concerns back to the surface. While those feelings are understandable, data can help assure you that the situation today is nothing like it was in 2008.

One of the key reasons the market won’t crash this time is the current undersupply of inventory. Housing supply comes from three main places: Current homeowners putting their homes up for sale, newly built homes coming onto the market, and distressed properties, short sales, or foreclosures. For the market to crash, you’d have to make the case for an oversupply of inventory added to the market, and the numbers just don’t support that. 

Even though the housing supply is increasing this year, there’s still a limited number of existing homes available. Based on the latest weekly data, inventory is up 27.8% compared to the same week last year. But compared to the same week in 2019, it’s down by 42.6%. This means inventory is still historically low. There simply aren’t enough homes on the market to cause prices to crash.

“The market certainly isn’t anywhere near the inventory levels that would have caused prices to drop significantly.”

There’s also a lot of talk about what’s happening with new construction homes today, and that may have you wondering if we’re overbuilding. But home builders are actually slowing down their production right now to avoid repeating the overbuilding that happened leading up to the housing crisis. Builders are reacting to higher mortgage rates and softening buyer demand by slowing down their work or being careful about not overbuilding homes as they did during the bubble.

The last place inventory can come from is distressed properties, including short sales, and foreclosures. Back in the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to secure a home they couldn’t truly afford. Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures.

The bottom line is, although the housing supply is growing this year, the market certainly isn’t anywhere near the inventory levels that would have caused prices to drop significantly. That’s why inventory tells us the housing market won’t crash.

If you have any questions about selling your home, feel free to give us a call anytime at (602)-920-0306. We can help you make the right decision for whatever you decide to do.