As I talk to consumers, there is a common question or concern that I get almost every other day… is the housing marketing going to crash like 2008?

The first question I always ask is, where did you find that data?

The overwhelming majority of people tell me, I read a news headline or saw something on TV.

These are great headlines to hook you in, but the problem is, it doesn’t tell the whole story. There are many factors to look at and understand before correlating the current market to right before the mortgage crisis crash of 2008.

First, let’s start with where we currently are at in regards to Supply v Demand. Currently in most markets, the inventory is still at historically low levels (below 2 months of supply). As we know with supply and demand, if the supply is low, prices will rise, when supply is high, prices will stabilize or lower. To give a little context, a balanced market is 6 months of inventory, we are still a ways away from that. Demand still greatly outpaces supply, and a stagnating economy with higher interest rates has only slightly cooled the housing market thus far.

Second, currently we are sitting at 48.1% of homes that are equity rich. What equity rich is, is any mortgage that has positive equity of 50% or greater. In 2008, for comparison this number was significantly lower right around 20%.

Did you know this last year, the US Housing Market had seen in many markets over 20% appreciation?

Right now, equity rich mortgages are 16 times greater than homes underwater

Home prices are expected to continue to increase, on average most reports are saying between 7-15%. Which is still above a normal appreciation rate if we look at historical data. On average a home appreciates at a 2-3% rate.

Third, Bad lending practices played a huge role in the mortgage crisis crash of 2008. Basically if you had a pulse you could get a loan and sometimes a few of them. Since then the loan requirements have tightened up significantly, which is one of the reasons when you go to buy a home you now have to sign a million pieces of paper and half of them are disclosures. The US government had put these safe guards in place so we will hopefully never see another mortgage crisis to that level.

These are just a few data points to keep an eye on. As these adjust we will see the market shift more. Depending on your area, you may be seeing slightly different numbers. Make sure to stay up to date with your local market to ensure you know the value of your largest asset at all times.

Always remember, what your home is worth is dependent on the market, and will fluctuate monthly, and you only realize the gains or losses when you sell the home, refinance or get a HELOC.

Your Favorite Realtor
Paul