3 Graphs Showing Why Today’s Housing Market Isn’t Like 2008

<article class="post-508796 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-508796"><span class="entry-date">October 26, 2022</span><div class="entry-header center-block text-center"><h1 class="entry-title">3 Graphs Showing Why Today’s Housing Market Isn’t Like 2008</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=3+Graphs+Showing+Why+Today%E2%80%99s+Housing+Market+Isn%E2%80%99t+Like+2008&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2F3-graphs-showing-why-todays-housing-market-isnt-like-2008%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p><img alt="3 Graphs Showing Why Today’s Housing Market Isn’t Like 2008 | Simplifying The Market" class="webfeedsFeaturedVisual wp-post-image" decoding="async" link_thumbnail="" loading="lazy" sizes="auto, (max-width: 549px) 100vw, 549px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110313/3-graphs-showing-why-todays-housing-market-isnt-like-2008-KCM-549×300.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110313/3-graphs-showing-why-todays-housing-market-isnt-like-2008-KCM-549×300.jpg 549w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110313/3-graphs-showing-why-todays-housing-market-isnt-like-2008-KCM.jpg 750w" style="display: block; margin-bottom: 5px; clear:both;max-width: 100%;" width="358"/></p>
<p>With all the headlines and talk in the media about the <a href="https://www.simplifyingthemarket.com/2022/09/14/is-the-real-estate-market-slowing-down-or-is-this-a-housing-bubble/?a=712984-fa409495d5d70154d03a25e81e9540e2">shift</a> in the housing market, you might be thinking this is a housing bubble. It’s only natural for those thoughts to creep in that make you think it could be a repeat of what took place in 2008. But the good news is, there’s concrete data to show why this is nothing like the last time.<span id="more-47353"></span></p>
<h4><strong>There’s Still a Shortage of Homes on the Market Today, Not a Surplus</strong></h4>
<p>For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. <a href="https://www.simplifyingthemarket.com/2022/10/18/the-latest-on-supply-and-demand-in-housing/?a=712984-fa409495d5d70154d03a25e81e9540e2">Supply</a> has increased since the start of this year, but there’s still a shortage of inventory available overall, primarily due to almost 15 years of underbuilding homes.</p>
<p>The graph below uses <a href="https://www.nar.realtor/newsroom/existing-home-sales-decreased-1-5-in-september">data</a> from the <em>National Association of Realtors</em> (NAR) to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just a 3.2-months’ supply at the current sales pace, which is significantly lower than the last time. There just isn’t enough inventory on the market for <a href="https://www.simplifyingthemarket.com/2022/10/20/whats-ahead-for-home-prices/?a=712984-fa409495d5d70154d03a25e81e9540e2">home prices</a> to come crashing down like they did last time, even though some overheated markets may experience slight declines.</p>
<p><a href="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110318/supply-of-homes-is-nothing-like-last-time-MEM.png"><img alt="3 Graphs Showing Why Today’s Housing Market Isn’t Like 2008 | Simplifying The Market" class="aligncenter wp-image-47357" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110318/supply-of-homes-is-nothing-like-last-time-MEM.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110318/supply-of-homes-is-nothing-like-last-time-MEM.png 960w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110318/supply-of-homes-is-nothing-like-last-time-MEM-400×300.png 400w" width="650"/></a></p>
<h4><strong>Mortgage Standards Were Much More Relaxed Back Then</strong></h4>
<p>During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Running up to 2006, banks were creating artificial demand by lowering <a href="https://www.simplifyingthemarket.com/2022/06/01/why-home-loans-today-arent-what-they-were-in-the-past/?a=712984-fa409495d5d70154d03a25e81e9540e2">lending standards</a> and making it easy for just about anyone to qualify for a home loan or refinance their current home.</p>
<p>Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.</p>
<p>The graph below uses <em>Mortgage Credit Availability Index</em> (MCAI) <a href="https://www.mba.org/news-and-research/newsroom/news/2022/10/11/mortgage-credit-availability-decreased-in-september">data</a> from the <em>Mortgage Bankers Association</em> (MBA) to help tell this story. In that index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is. In the latest report, the index fell by 5.4%, indicating standards are tightening.</p>
<p><a href="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110316/lending-standards-still-under-control-MEM.png"><img alt="3 Graphs Showing Why Today’s Housing Market Isn’t Like 2008 | Simplifying The Market" class="aligncenter wp-image-47356" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110316/lending-standards-still-under-control-MEM.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110316/lending-standards-still-under-control-MEM.png 960w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110316/lending-standards-still-under-control-MEM-400×300.png 400w" width="650"/></a></p>
<p>This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards over the past 14 years have helped prevent a scenario that would lead to a wave of foreclosures like the last time.</p>
<h4><strong>The Foreclosure Volume Is Nothing Like It Was During the Crash</strong></h4>
<p>Another difference is the number of homeowners that were facing foreclosure after the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses <a href="https://www.attomdata.com/wp-content/uploads/2022/10/Foreclosure-Starts-Q322.jpg">data</a> from <em>ATTOM Data Solutions</em> to help paint the picture of how different things are this time:</p>
<p><a href="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110314/foreclosure-starts-then-and-now-MEM.png"><img alt="3 Graphs Showing Why Today’s Housing Market Isn’t Like 2008 | Simplifying The Market" class="aligncenter wp-image-47355" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110314/foreclosure-starts-then-and-now-MEM.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110314/foreclosure-starts-then-and-now-MEM.png 960w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/25110314/foreclosure-starts-then-and-now-MEM-400×300.png 400w" width="650"/></a></p>
<p>Not to mention, homeowners today have options they just didn’t have in the housing crisis when so many people owed more on their mortgages than their homes were worth. Today, many homeowners are <a href="https://www.simplifyingthemarket.com/2022/09/26/the-true-strength-of-homeowners-today/?a=712984-fa409495d5d70154d03a25e81e9540e2">equity rich</a>. That equity comes, in large part, from the way home prices have appreciated over time. <a href="https://www.corelogic.com/intelligence/homeowner-equity-insights/">According</a> to <em>CoreLogic</em>:</p>
<blockquote>
<p><em>“The total average equity per borrower has now reached almost <strong>$300,000, the highest in the data series.”</strong></em></p>
</blockquote>
<p>Rick Sharga, Executive VP of Market Intelligence at <em>ATTOM Data</em>, <a href="https://www.attomdata.com/news/market-trends/foreclosures/attom-september-and-q3-2022-u-s-foreclosure-market-report/">explains</a> the impact this has:</p>
<blockquote>
<p><em>“Very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure. . . . We believe that this may be an indication that<strong> borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction</strong>.”</em></p>
</blockquote>
<p><em> </em>This goes to show homeowners are in a completely different position this time. For those facing challenges today, many have the option to use <a href="https://www.simplifyingthemarket.com/2022/10/05/the-long-term-benefit-of-homeownership/?a=712984-fa409495d5d70154d03a25e81e9540e2">their equity</a> to sell their house and avoid the foreclosure process.</p>
<h3><strong>Bottom Line</strong></h3>
<p>If you’re concerned we’re making the same mistakes that led to the housing crash, the graphs above should help alleviate your fears. Concrete data and expert insights clearly show why this is nothing like the last time.</p>
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