Is the Housing ๐ŸกMarket Going to Crash Again? ๐Ÿ“ˆ

Another common question โ” we are getting is, Is what happening now going to be like what happened in the 2008 housing market crash? ๐Ÿคทโ€โ™‚๏ธ

This is Carlitos Zapata with PITBULL REALTY ๐Ÿ‘‹

ย If you look at annual home price ๐Ÿ’ฐ appreciation six years leading up to the 2008 crash ๐Ÿ“‰ from 2000 to 2005 we saw an increase from 6.5% to 12.5% which is significant ๐Ÿ˜ฒ, but if you look at annual appreciation from six years ๐Ÿ“… prior to now from 2014 to 2019 home price appreciation only ranged from 4.4% to 6.4% which is nowhere near the high levels ๐Ÿ” of appreciation prior to the 2008 crash.ย ย 

Really the highest year in the last six years is not even ๐Ÿšซ equal to the lowest year leading up โžก๏ธ to the housing crash ๐Ÿ .ย  Meaning we havenโ€™t had aggressive ๐Ÿ˜ก levels of appreciation over the past six years ๐Ÿ“…, itโ€™s been more normal.ย 

Also, if you look ๐Ÿ‘€ at this graph from the Mortgage Bankers Association if you look at the Mortgage Credit Availability Index ๐Ÿ“, meaning how easy it is to get a loan ๐Ÿค, if you look at the peak on this graph in 2006 ๐Ÿ“Š, the taller the graph the easier it is to get a loan ๐Ÿ’ฐif you look at the crash ๐Ÿ“‰ at the time of the housing ๐Ÿ  bubble, the graph was high โฌ†๏ธ, so it was easy for people to get a loan during the crash, but now if you compare how easy it is to get a loan, on the left side โฌ… of the graph, but now it is much more difficult to get a loan and qualify. ๐Ÿ˜ฌ

Lastly, back in the crash in 2007, we had 8.2 months ๐Ÿ“… of supply of inventory on the market, and we know ๐Ÿค” that having any more inventory above six months puts us in a buyers ๐Ÿ’ฒ market, and now today we only have 3.1 months of inventory ๐Ÿ›’which means we are in a sellerโ€™s ๐Ÿ’ฒ market.ย  Also, right now if we look at this graph ๐Ÿ“Š showing the Total Home Equity Cashed Out, by Freddie Mac, back during the crash๐Ÿ“‰ , we had 824 Billion dollars of money ๐Ÿ’ต refinanced on their homes ๐Ÿ , now we only have 232 Billion, so we have more equity in our homes now.ย ย 

During the crash ๐Ÿ“‰, people were buying cars ๐Ÿš˜ and boats ๐Ÿšค and using their homes as an ATM ๐Ÿง, they were financing their lifestyles. Today consumers are treating equity very differently today โฌ‡๏ธ.ย  And now today 53.8% of homes ๐Ÿ  have at least 50% equity today. In 2008 homes were leveraged to the till and people ๐Ÿ‘ฅ owned more than they were worth ๐Ÿ’ฒ so they were walking away ๐Ÿšถโ€โ™€๏ธ, but today when people have so much equity in their homes they are not ๐Ÿšซ walking away.ย ย 

Lastly according to Zillow and NAR, in 2008 the Percent of Median Income needed to purchase ๐Ÿ’ฐ a home was 25.4% of a households ๐Ÿ  income was needed to pay ๐Ÿ’ต the mortgage, and today only 14.8% of householdsโ€™ income is needed to pay the mortgage ๐Ÿค”, again very different today than 2008. So if we look ๐Ÿ‘€ at all these things to compare 2008 to today, most of the factors that led up to the crash ๐Ÿ“‰in 2008 just donโ€™t exist today.ย ย 

One thing that is different โŒ than in 2008 the unemployment rate was 13.2 percent and today we are at 20.6 percent โฌ†๏ธso that obviously is having a negative ๐Ÿ‘Ž impact on the economy, but slowly as the pandemic ๐Ÿ˜ท isolation and social distancing starts to ease up, the hope ๐Ÿ™ is that people will start to get their jobs back ๐Ÿ˜.ย  So, Iโ€™m not saying what will or will not happen to the housing ๐Ÿ  market, but most of the factors contributing to the 2008 crash are just not present today. โ—๏ธ

Hey, Iโ€™m not ๐Ÿšซ giving my opinion, Iโ€™m just stating what experts are saying ๐Ÿ—ฃ and I thought it could be of service to you.ย  ๐Ÿ‘

Feel free to reach out to us ๐Ÿ“ฒ at PITBULL REALTY with any questions or concerns, we are always here to help.ย  ๐Ÿ™

This is your friend ๐Ÿ‘ Carltios Zapata from PITBULL REALTY

REAL ESTATE WITH LOYALTY AND LOVE ๐Ÿ’“

Is the Housing ๐ŸกMarket Going to Crash Again? ๐Ÿ“ˆ
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