Housing Market:: Gigantic Difference Between 2008 and 2018

Dated: 08/18/2018

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Housing Market: Another Gigantic Difference Between 2008 and 2018 | Simplifying The Market

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.

2008 Housing Inventory

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.

2018 Housing Inventory

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).

WHAT'S IT MEANS TO YOU:  Short supply continues dashing the hopes of those who think the market HAS to come down.   But prices are slowing their rise, as higher interest rates make it tougher for first time buyers to afford a home.  But I have information on programs that help new buys and a system to sell your home and buy another without the fear of selling and having no where to move.   Just contact me!

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Michael Dryden

Michael Dryden has helped North Tarrant County families buy and sell homes using the skills developed over more than fifty years of work experience and over 25 years in North Tarrant County. Michael....

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