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3 Graphs To Show This Isn’t a Housing Bubble

August 2, 2022 By Tami Savage

3 Graphs To Show This Isn’t a Housing Bubble

With all the headlines and buzz in the media, some consumers believe the market is in a housing bubble. As the housing market shifts, you may be wondering what’ll happen next. It’s only natural for concerns to creep in that it could be a repeat of what took place in 2008. The good news is, there’s concrete data to show why this is nothing like the last time.

There’s a Shortage of Homes on the Market Today, Not a Surplus

The supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation.

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to tumble. Today, supply is growing, but there’s still a shortage of inventory available.

The graph below uses data from the National Association of Realtors (NAR) to show how this time compares to the crash. Today, unsold inventory sits at just a 3.0-months’ supply at the current sales pace.

Supply of Homes is Nothing Like Last Time

One of the reasons inventory is still low is because of sustained underbuilding. When you couple that with ongoing buyer demand as millennials age into their peak homebuying years, it continues to put upward pressure on home prices. That limited supply compared to buyer demand is why experts forecast home prices won’t fall this time.

Mortgage Standards Were Much More Relaxed During the Crash

During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. The graph below showcases data on the Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers Association (MBA). The higher the number, the easier it is to get a mortgage.

Lending Standards Still Under Control

Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices.

Today, things are different, and purchasers face much higher standards from mortgage companies. Mark Fleming, Chief Economist at First American, says:

“Credit standards tightened in recent months due to increasing economic uncertainty and monetary policy tightening.” 

Stricter standards, like there are today, help prevent a risk of a rash of foreclosures like there was last time.

The Foreclosure Volume Is Nothing Like It Was During the Crash

The most obvious difference is the number of homeowners that were facing foreclosure after the housing bubble burst. Foreclosure activity has been on the way down since the crash because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM Data Solutions to help tell the story:

Foreclosure Activity Then and Now

In addition, homeowners today are equity rich, not tapped out. In the run-up to the housing bubble, some homeowners were using their homes as personal ATMs. Many immediately withdrew their equity once it built up. When home values began to fall, some homeowners found themselves in a negative equity situation where the amount they owed on their mortgage was greater than the value of their home. Some of those households decided to walk away from their homes, and that led to a wave of distressed property listings (foreclosures and short sales), which sold at considerable discounts that lowered the value of other homes in the area.

Today, prices have risen nicely over the last few years, and that’s given homeowners an equity boost. According to Black Knight:

“In total, mortgage holders gained $2.8 trillion in tappable equity over the past 12 months – a 34% increase that equates to more than $207,000 in equity available per borrower. . . .”

With the average home equity now standing at $207,000, homeowners are in a completely different position this time.

Bottom Line

If you’re worried we’re making the same mistakes that led to the housing crash, the graphs above should help alleviate your concerns. Concrete data and expert insights clearly show why this is nothing like the last time.

Tagged With: For Buyers, Foreclosures, Housing Market Updates

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The market has been on a roller coaster lately.  Super excited about the mortgage rate drop on August 4, 2022.  So we'll take a moment to look at 
• the mortgage rates week-to-week, 
• review the latest data from NAR on pending and existing home sales, and
• see/hear what some of the experts have stated.

Digital Business Card: https://tamisavage.com/bc  (so you can reach out, find me on social media platforms, and more)
National Housing Market Update August 2022
YouTube Video UCje-ynLSmvEYv1nXUpNTiMw_rnqzfAO8BRw
Don't let inflation delay your homebuying plans. Let's connect so you can start the process today.

Source for Data in Video: https://apnews.com/article/key-inflation-report-highest-level-in-four-decades-c0248c5b5705cd1523d3dab3771983b4
How Homeownership Can Help Shield You from Inflation
YouTube Video UCje-ynLSmvEYv1nXUpNTiMw_AROdzHn8CQw
Want to know if we’re in a housing market correction right now? 🏡  Check out the video to see what the experts say.  (Decided to do something a bit different and certainly more fun.  Went to Poole's Mill Park (Ball Ground, GA) to shoot this housing market update video.)

🤝 I'm here to help with your real estate goals, so reach out if there's anything I can do.

For more information:
📱   Cell:  (770) 744-2524
☎️ Office:  (888) 959-9461 x2543
📧  tami@tamisavage.com
🌐 www.tamisavage.com


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I'm Tami Savage, a local Realtor® with eXp Realty in Cumming, GA. We lived on the southside of Metro Atlanta in Fayette County, GA (Peachtree City & Fayetteville) for 19 years then moved away for about 5 years.  Georgia recently called us home, we bought a house in west Forsyth this past Winter.  Excited to get to know the area, community, businesses around, and more.  

My goal is to present helpful information with an emphasis on the Real Estate market (of course) but also highlighting Cumming, Canton, Ball Ground, Milton/Alpharetta, and surrounding areas.  

Hit the subscribe button to get real estate info every week. 

Want more info ... 
check out my digital business card:   https://tamisavage.com/bc

📱   Cell:  (770) 744-2524
☎️ Office:  (888) 959-9461 x2543
National Housing Market Update for end of July 2022
YouTube Video UCje-ynLSmvEYv1nXUpNTiMw_vl9R6_iverE
Want to know what the future holds for rates, prices, and inventory? Let's connect so you have a trusted advisor to answer your housing market questions.

Sources for Data in Video
• https://www.marketwatch.com/picks/until-inflation-peaks-mortgage-rates-wont-either-we-asked-3-economists-and-real-estate-pros-will-mortgage-rates-climb-higher-this-summer-01655941487
• https://twitter.com/RDC_Economics/status/1542511111852793857
• https://www.bankrate.com/real-estate/housing-market-predictions/
Expert Insights on Where the Housing Market Is Heading
YouTube Video UCje-ynLSmvEYv1nXUpNTiMw_HYD_ew9qnzM
Today's market is at a turning point. Let's connect so you have an expert in your corner when you sell your house.
Lean on a Real Estate Expert When You Sell in Today's Shifting Market
YouTube Video UCje-ynLSmvEYv1nXUpNTiMw_2Cqf4nsDEuQ
Getting pre-approved is a great opening play as a homebuyer. Let's connect so you have a strategy in place that helps you feel confident in your home search.
Pre-Approval Is a Strategic Move When You're Buying a Home
YouTube Video UCje-ynLSmvEYv1nXUpNTiMw_4kbQ0EiCroQ
Is it a good idea to buy a house now? 💰🏡

Check out the video to see what the experts say and see the mortgage changes throughout 2022 so far. 📈

🤝 I'm here to help with your real estate goals, so reach out if there's anything I can do.

For more information:
📱   Cell:  (770) 744-2524
☎️ Office:  (888) 959-9461 x2543
📧  tami@tamisavage.com
🌐 www.tamisavage.com


-------------------------------------------------------------------


I'm Tami Savage, a local Realtor® with eXp Realty in Cumming, GA. We lived on the southside of Metro Atlanta in Fayette County, GA (Peachtree City & Fayetteville) for 19 years then moved away for about 5 years.  Georgia recently called us home, we bought a house in west Forsyth this past Winter.  Excited to get to know the area, community, businesses around, and more.  

My goal is to present helpful information with an emphasis on the Real Estate market (of course) but also highlighting Cumming, Canton, Ball Ground, Milton/Alpharetta, and surrounding areas.  

Hit the subscribe button to get real estate info every week. 

Want more info ... 
check out my digital business card:   https://tamisavage.com/bc

📱   Cell:  (770) 744-2524
☎️ Office:  (888) 959-9461 x2543
National Housing Market Update for mid-July 2022
YouTube Video UCje-ynLSmvEYv1nXUpNTiMw_Dqc2-H0E9mU
For the next five years, experts say home prices will continue to rise. Let's connect if you're ready to invest in homeownership and grow your wealth.

Sources used for data:
https://pulsenomics.com/surveys/#home-price-expectations
Home Price Appreciation Helps Build Your Wealth
YouTube Video UCje-ynLSmvEYv1nXUpNTiMw_C8vHJlhf4q0
Americans rank homeownership as the top sign of financial success. Let's connect if you're dreaming of buying a home this year.

Read the article: https://tamisavage.com/more-americans-choose-real-estate-as-the-best-investment-than-ever-before/

Sources used for data:
https://www.bankrate.com/mortgages/homeownership-remains-centerpiece-of-american-dream/
Homeownership Is Still the American Dream
YouTube Video UCje-ynLSmvEYv1nXUpNTiMw_DhSRSEbnze8
Load More... Subscribe

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