{"id":8273,"date":"2024-02-29T11:30:00","date_gmt":"2024-02-29T11:30:00","guid":{"rendered":"https:\/\/thezakariagroup.com\/why-we-arent-headed-for-a-housing-crash\/"},"modified":"2024-02-29T11:30:00","modified_gmt":"2024-02-29T11:30:00","slug":"why-we-arent-headed-for-a-housing-crash","status":"publish","type":"post","link":"https:\/\/thezakariagroup.com\/why-we-arent-headed-for-a-housing-crash\/","title":{"rendered":"Why We Aren’t Headed for a Housing Crash"},"content":{"rendered":"
\"Why<\/p>\n

If you\u2019re holding out hope that the housing market is going to crash and bring home prices<\/a> back down, here\u2019s a look at what the data shows. And spoiler alert: that\u2019s not in the cards. Instead, experts say home prices<\/a> are going to keep going up.<\/p>\n

Today\u2019s market is very different than it was before the housing crash in 2008. Here\u2019s why.<\/strong><\/p>\n

It\u2019s Harder To Get a Loan Now \u2013 and That\u2019s Actually a Good Thing<\/strong><\/h4>\n

It was much easier to get a home loan during the lead-up to the 2008 housing crisis than it is today. Back then, banks had different\u00a0lending standards, making it easy for just about anyone to qualify for a home loan or refinance an existing one.<\/p>\n

Things are different today. Homebuyers face increasingly higher standards from mortgage companies. The graph below uses\u00a0data<\/a>\u00a0from the\u00a0Mortgage Bankers Association<\/em>\u00a0(MBA) to show this difference. The lower the number, the harder it is to get a mortgage. The higher the number, the easier it is:<\/p>\n

\"a<\/a><\/p>\n

<\/p>\n

The peak in the graph shows that, back then, lending standards weren\u2019t as strict as they are now. That means lending institutions took on much greater risk in both the person and the mortgage products offered around the crash. That led to mass defaults and a flood of foreclosures<\/a> coming onto the market.<\/p>\n

There Are Far Fewer Homes for Sale Today, so Prices Won\u2019t Crash<\/strong><\/h4>\n

Because there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures<\/a>), that caused home prices to fall dramatically. But today, there\u2019s an inventory shortage \u2013 not a surplus.<\/p>\n

The graph below uses data from the National Association of Realtors<\/em><\/a> (NAR) and the Federal Reserve<\/em><\/a> to show how the months\u2019 supply of homes available now (shown in blue<\/em>) compares to the crash (shown in red<\/em>):<\/p>\n

\"a<\/a><\/p>\n

<\/p>\n

Today, unsold inventory sits at just a 3.0-months\u2019<\/a> supply. That\u2019s compared to the peak of 10.4 month\u2019s supply back in 2008. That means there\u2019s nowhere near enough inventory on the market for home prices to come crashing down like they did back then.<\/p>\n

People Are Not Using Their Homes as ATMs Like They Did in the Early 2000s<\/strong><\/h4>\n

Back in the lead up to the housing crash, many homeowners were borrowing against the equity in their homes to finance new cars, boats, and vacations. So, when prices started to fall, as inventory rose too high, many of those homeowners found themselves underwater.<\/p>\n

But today, homeowners are a lot more cautious. Even though prices have skyrocketed in the past few years, homeowners aren\u2019t tapping into their equity the way they did back then.<\/p>\n

Black Knight<\/em>\u00a0reports<\/a> that tappable equity (the amount of equity available for homeowners to access before hitting a maximum 80% loan-to-value ratio, or LTV) has actually\u00a0reached an all-time high:<\/p>\n

\u00a0\"a<\/a><\/p>\n

<\/p>\n

That means, as a whole, homeowners have more equity available than ever before. And that\u2019s great. Homeowners are in a much stronger position today than in the early 2000s. That same report from Black Knight <\/em>goes on to explain<\/a>:<\/p>\n

\u201cOnly 1.1% of mortgage holders (582K) ended the year underwater, down from 1.5% (807K) at this time last year.\u201d<\/em><\/p><\/blockquote>\n

And since homeowners are on more solid footing today, they\u2019ll have options to avoid foreclosure. That limits the number of distressed properties coming onto the market. And without a flood of inventory, prices won\u2019t come tumbling down.\u00a0<\/p>\n

Bottom Line<\/h3>\n

While you may be hoping for something that brings prices down, that\u2019s not what the data tells us is going to happen. The most current research clearly shows that today\u2019s market is nothing like it was last time.<\/p>\n<\/div>\n

Powered by WPeMatico<\/a><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

If you\u2019re holding out hope that the housing market is going to crash and bring home prices back down, here\u2019s a look at what the data shows. And spoiler alert: that\u2019s not in the cards. Instead, experts say home prices are going to keep going up. Today\u2019s market is very different than it was before […]<\/p>\n","protected":false},"author":101010,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[102,104,108],"tags":[],"jetpack_publicize_connections":[],"yoast_head":"\nWhy We Aren't Headed for a Housing Crash - The Zakaria Group<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/thezakariagroup.com\/why-we-arent-headed-for-a-housing-crash\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why We Aren't Headed for a Housing Crash - The Zakaria Group\" \/>\n<meta property=\"og:description\" content=\"If you\u2019re holding out hope that the housing market is going to crash and bring home prices back down, here\u2019s a look at what the data shows. 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