We all remember what happened in 2008, and unfortunately, the words “recession” and “housing bubble” immediately bring back memories of the crash.
However, there are big differences between today’s market and the ones leading up to the crash.
Here are the reasons today is nothing like the last time.
Before the Great Recession, the housing market had:
- Loose lending standards
- An oversupply of homes
- Overtapped equity
Today’s market looks the opposite with:
- Stricter lending practices
- An undersupply of homes
- More equity
In fact, in four out of the last six recessions home prices still appreciated, and experts project the same for this year’s forecast.
HOUSING EXPERTS PROJECT CONTINUED PRICE APPRECIATION
While growing, inventory is still low overall. That’s why most major housing experts project ongoing home price appreciation in most markets. It will just happen at a more moderate pace moving forward.
Why? Because the amount of homes for sale still doesn’t match demand from buyers.
Even though housing supply is growing today, it’s still low overall thanks to several factors, including a long period of underbuilding homes. And experts say that’s going to help keep upward pressure on home prices this year. Additionally, since mortgage rates are higher this year than they were last year, buyer demand has slowed.
As the market undergoes this change, it’s true price appreciation this year won’t match the feverish pace in 2021. But the rapid appreciation the market saw last year wasn’t sustainable anyway.