3 Graphs That Show How Today’s Inventory Differs from 2008
Even if you didn’t own a home at the time, you probably remember the housing crisis in 2008. That crash impacted the lives of countless people. Many now live with the worry that something like that could happen again. But rest easy, because things are different than they were back then.
Here’s why experts are so confident. For the market to crash, there would have to be too many houses for sale, but the data doesn’t show that’s happening. Right now, there’s an undersupply, not an oversupply like the last time. The housing supply comes from three main sources:
- Homeowners deciding to sell their houses (existing homes)
- New home construction (newly built homes)
- Distress properties (foreclosures or short sales)
And if we look at those three main sources of inventory, you will see it’s clear this isn’t like 2008.
Homeowners Deciding To Sell Their Houses
Although the supply of existing homes is up compared to this time last year, it’s still low overall. And while this varies by local market, nationally, the current months’ supply is well below the norm. And, even further below what we saw during the crash. The graph below shows this more clearly.
So, what does this mean? There just aren’t enough homes available to make values drop.
New Home Construction
People are also talking about what’s going on with newly built houses these days. That might make you wonder if homebuilders are overdoing it. Even though new homes make up a larger percentage of the total inventory than the norm, there’s no need for alarm.
Distressed Properties (foreclosures and short sales)
The last place inventory can come from is distressed properties, including short sales and foreclosures. During the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to get a home loan they couldn’t afford. Today, lending standards are much tighter. There are more qualified buyers and fewer foreclosures.
What This Means for You
Inventory levels aren’t anywhere near where they would need to be for prices to drop significantly and for the housing market to crash.