The reason why the housing market will NOT be crashing this time

So the rumor is, that the housing market is headed to crash in 2023 – But what does the data indicate?  How are we different in situation from 2008-2010, in the current year 2022? 

Back in 2008, there were way too many supply of homes on the market.   The supply of inventory needed to sustain a normal real estate market is said to be approximately 6 months, but we were at average of 10.4 months back in 2008. This was the highest between 1999 to 2008, and up to this date.  The average of month’s supply in 2022 is at 3.3 month.

Another thing is the mortgage standards – It was much easier (or too easy) for consumers to get a home mortgage loan back in the day, while we have learned our lesson during the market crash, and the standards has gotten a lot more strict now.  

Below graph indicates the trend of lending standards, which the higher the index is, the easier it is to get a loan.  You can see that it had changed drastically after 2008. 

Lastly, the volume of foreclosure – indicates that it is nothing like back in the housing market crash, as it has been way down since.  Buyers today are more qualified and less likely to default on their loan. 

Back in 2008, there were 2.3M homes (reaching 2.9M in 2010, at highest in history since 2005 to this date), while we are at 151K homes in 2021.  

So if you’re worried we are making the same mistakes that led to the housing market crash, these data should help alliviate your concerns. 

What are your thoughts on this?  Please reach out so we can chat about it! 

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