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4 Graphs Help to Show Why Today’s Housing Market Isn’t Like 2008

With all the headlines and talk in the media about the housing market shifting, you might be wondering if 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 here’s the good news for you, there’s concrete data to show why this is nothing like the last time.

Nationally there’s Still a Shortage of Homes on the Market Today, Not a Surplus

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. Supply has increased since the start of this year, but nationally there’s still a shortage of inventory available overall, primarily due to almost 15 years of underbuilding new homes.

Locally we’re still in a Seller’s Market – there’s Still a Shortage of Homes, not a Surplus

Mortgage Standards Were Much More Relaxed Back Then

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 lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home.

Back then, lending institutions took on greater risk in both the person and the mortgage products offered which led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.

“Title XIV establishes minimum standards for all mortgage products. Creditors may not make a home mortgage loan unless they reasonably determine that the borrower can repay the loan based on the borrower’s credit history, current income, expected income and other factors.”

The Foreclosure Volume Is Nothing Like It Was During the Crash

“The total average equity per borrower has now reached almost $300,000, the highest in the data series.”

“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 borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction.”

Homeowners are in a vastly different position than the last economic downturn. For those facing challenges today, many have the option to use their equity to sell their house and avoid the foreclosure process as why would you give the bank the equity when you can sell and take the cash to help your next move.

Bottom Line

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