According to the National Association of Realtors (NAR)
It is clear that the market has changed since the start of the year and many people are drawing comparisons to the 2007 housing market. However, housing economists have found compelling reasons to prove that our market is unique from the 2007 crash.
Rob Dietz, the Chief Economist at the NAHB states, “We’re thinking this is going to be a moderate downturn.” Although prices and demand is cooling, it is not expected to drop as drastically as what was experienced during the Great Depression. Here are strong reasons why the NAR doesn’t believe a crash will occur…
•Inventories are still very low: This ongoing lack of inventory explains why the supply-and-demand equation simply won’t allow a price crash shortly.
•Builders didn’t build quickly enough to meet demand: Homebuilders pulled way back after the last crash and never ramped up to pre-2007 levels. Now there’s no way for them to buy land and win regulatory approvals quickly enough to quench demand. Overbuilding looks unlikely.
•Demographic trends are creating new buyers: Many homeowners during Covid decided they need bigger places, especially with the rise of working from home. Millennials are a huge group that is finally in their prime buying years.
•Lending standards remain strict: Unlike 2007 “liar loans”, in which borrowers didn’t need to document their income and lenders offered loans regardless of someone’s credit history. Today lenders impose tough standards, making California have the lowest level of “underwater” homeowners in the nation.
•Foreclosure activity is muted: After the housing crash millions of foreclosures flooded the housing market, depressing prices. That is not the case now.
•Rent increase: Rent continues to jump higher with each lease renewal.
-According to NAR
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