Housing Market Another Gigantic Difference Between 2008 And 2018

Dated: December 13 2018

Views: 21

Housing Market Another Gigantic Difference Between 2008 And 2018

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.

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

Carlos Cardenas

Real Estate Broker offering over 18 years of experience in the industry specializing in Commercial and Residential Real Estate in South Florida. Solid business background with experience in accounting....

Latest Blog Posts

Home Price Appreciation Is Skyrocketing in 2021. What About 2022?

Home Price Appreciation Is Skyrocketing in 2021. What About 2022?One of the major story lines over the last year is how well the residential real estate market performed. One key metric in the

Read More

Don’t Wait To Sell Your House

Don’t Wait To Sell Your HouseWe’re in the ultimate sellers’ market right now. If you’re a homeowner thinking about selling, you have a huge advantage in today’s housing

Read More

Four Expert Views on the 2021 Housing Market

Four Expert Views on the 2021 Housing MarketThe housing market was a shining star in 2020, fueling the economic turnaround throughout the country. As we look forward to 2021, can we expect real

Read More