This Market is Nothing Like the 2008 Housing Bubble

We are sometimes asked, are we in for another housing crash like we saw in 2008? No one knows the future, of course, but current market conditions are far from what we saw in 2008. Although mortgage rates have risen, home prices continue to hold steady across many markets. Here are three factors that differentiate today’s housing landscape from the past bubble:

  1. Limited housing supply driving demand: Despite increasing mortgage rates, homebuyers remain enthusiastic, leading to strong demand. The National Association of Realtors reports that around one-third of all listings still receive multiple offers, with 28% of homes selling above their asking price.
  2. Financially responsible homebuyers: During the 2008 housing market crash, mortgage standards reached all-time lows in terms of credit scores, down payment requirements, and income verification. In contrast, today’s guidelines are much stricter, ensuring that borrowers are financially secure and capable of managing their mortgages.
  3. High home equity levels: In the past, homeowners frequently extracted equity, leaving many with negative equity when the market declined. Presently, equity levels are considerably higher, allowing homeowners to weather potential value drops without significant concern.

The current housing market demonstrates a healthy balance between demand and financial responsibility. As such, the situation is markedly different from the housing bubble experienced over a decade ago, making it unlikely that we will see any market corrections like we saw in 2008.

To the contrary, the CoreLogic Home Price Index shows that home prices have once again started increasing, causing some experts to cautiously suggest that national prices may have actually bottomed out.  This paired with stabilizing mortgage interest rates could make this a good time for homebuyers looking to enter the market.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Consult a professional financial advisor before making any investment decisions.