Why Today’s Housing Inventory Shows a Crash Isn’t on the Horizon

Remember the time in 2008 when there was a problem with houses? Even if you didn’t own a house then, you might have heard about it. If you’re worried that the same thing might happen again, here’s some good news – things are different now.

One big reason is that there aren’t enough homes for sale. It’s not like before when there were too many. Now, there’s not enough. For a crash to happen, there would need to be too many houses for sale, but the information we have doesn’t show that.

2008 housing market

Homes for sale come from three main places:

  1. People who own homes deciding to sell them.
  2. New homes that are built.
  3. Homes that are in trouble, like ones being sold because the owners can’t afford them (foreclosures or short sales).

Let’s take a closer look at the homes available today to see why it’s not the same as 2008.

Homeowners Deciding To Sell Their Houses Even though there are more houses available now compared to last year, it’s still not a lot. The number of houses available right now is less than usual. The graph below makes this easier to understand. If you check the most recent data (in green) and compare it to 2008 (in red), there’s only about one-third of the houses available today compared to back then.

So, what does all this information mean? It means there aren’t enough homes available to make home values go down. For it to be like 2008 again, there would need to be a lot more people selling their houses, and not many people buying them. But that’s not what’s happening now.

Newly Built Homes are also being discussed a lot lately. You might be wondering if there are too many new houses being built. The graph below shows the number of new houses built over the last 52 years:

The 14 years of not building enough homes (shown in red) is a major reason why there are so few homes available today. In simple terms, builders haven’t been making enough homes for a long time, and that’s caused a big gap in the number of homes available.

Even though the last blue bar on the graph shows that building is increasing and getting closer to the usual amount, it won’t suddenly lead to having too many homes. That’s because there’s a big gap to fill. Also, builders are being careful not to build too many homes, like they did during the housing bubble.


Distressed Properties (Foreclosures and Short Sales)

The last way homes become available is through distressed properties, which includes short sales and foreclosures. In the past housing crisis, there were a lot of foreclosed homes because the rules for getting a home loan were not very strict. Many people got loans for homes they couldn’t really afford.But things are different now. The rules for getting a loan are much stricter, which means there are more qualified buyers and way fewer foreclosures.

The graph below, which uses data from the Federal Reserve, shows how things have changed since the housing crash:

This graph shows that as the rules for getting loans became stricter and buyers became more qualified, the number of foreclosures started to decrease. In 2020 and 2021, a combination of a moratorium on foreclosures and the forbearance program helped stop a repeat of the large number of foreclosures we saw around 2008.

The forbearance program made a big difference by giving homeowners new options, like deferring loan payments and making changes to their loans. Data about how well the program worked shows that four out of every five homeowners who finished forbearance either paid everything they owed or worked out a plan to avoid foreclosure. These are some of the main reasons why there won’t be a lot of foreclosed homes hitting the market.

What This Means for You

The number of homes available isn’t close to what would be needed for prices to go down a lot and for the housing market to crash. According to Bankrate, this situation isn’t expected to change soon, especially because there’s still strong demand from buyers:

“The ongoing shortage of homes to buy is why many buyers have to bid higher prices. This also means that the balance between supply and demand won’t let prices crash anytime soon.

Bottom Line

There aren’t enough homes in the market for a situation like the 2008 housing crisis to happen again, and there’s no indication that this will change soon. This is why the housing inventory signals that there’s no crash on the horizon.

Find out why Kaya Homes is the leader in Long Island Real Estate and are your go-to realtor in the Lynbrook, Oceanside, Malverne, Hewlett, Valley Stream, East Rockaway, Woodmere, Cedarhurst, Baldwin, North Woodmere, Woodsburgh, Hewlett Neck Hewlett Harbor, Bellmore,Wantagh,Merrick and Freeport area.

Thu, 05 Oct 2023 22:30:28 +0000

Accessibility Toolbar

Scroll to Top