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Housing Market: Another Gigantic Difference Between 2008 and 2018

Housing Market: Another Gigantic Difference Between 2008 and 2018

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.

Housing Market: Another Gigantic Difference Between 2008 and 2018 | Keeping Current Matters

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.

Housing Market: Another Gigantic Difference Between 2008 and 2018 | Keeping Current Matters

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).

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3 replies
  1. Mary Jo Quay
    Mary Jo Quay says:

    No, we created the HOUSE IS YOUR ATM pricing with Make Me Move to get people to sell. I sold a home in the recession for $100K, the owner made a few improvements, and now wants to sell at $329K. He made improvements, but not a lot. We’ve made price reductions and he is hitting panic because he thinks that he is losing money!
    Zillow has a Make Me Move (it did not originate with Zillow), where people name what they want. Sometimes they are $100K over a real price, but I’m certain that some agent will promise them an outrageous number. I just lost a listing because I gave the seller a market price that adjusted for an old roof and windows, and I’m assuming that someone promised her $75K more.
    I check MLS every morning. This morning there were 302 new listings and 300 price reductions, then we go onto Back on Market, Expired, and canceled. On one hand we are telling sellers that their house should have 12 offers in as many hours, and then, OOOPS!, 3 weeks later with no showings we ask for a price reduction. We are in a correction right this minute. We’ve overpriced our entry level listings, they aren’t selling so the sellers can’t move to their next home, and the economy will back up because people will not be purchasing that new car to go with the new house, much less new appliances and sofas.

  2. Vicki
    Vicki says:

    You said it perfectly ! I would never again purchase in a market with multiple offers, waving inspections, desperate to miss out mode. 2007 was a lesson. Giddy sellers, easy commission for Agents.

  3. Jon S
    Jon S says:

    As a customer and potential downsizer I appreciate this very reasonable and readable analysis. Thank you for helping sellers avoid the temptation to sell in an almost panicked state. If everyone did that it would create a self fulfilling prophecy. Real estate markets need to communicate more of this type of rational thinking.


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