Think This Is a Housing Crisis? Think Again.

By
Real Estate Agent with Berkshire Hathaway HomeServices - C. Dan Joyner 21498

Think This Is a Housing Crisis? Think Again.

Think This Is a Housing Crisis? Think Again. | MyKCM

With all of the unanswered questions caused by COVID-19 and the economic slowdown we’re experiencing across the country today, many are asking if the housing market is in trouble. For those who remember 2008, it's logical to ask that question.

Many of us experienced financial hardships, lost homes, and were out of work during the Great Recession – the recession that started with a housing and mortgage crisis. Today, we face a very different challenge: an external health crisis that has caused a pause in much of the economy and a major shutdown of many parts of the country.

Let’s look at five things we know about today’s housing market that were different in 2008.

1. Appreciation

When we look at appreciation in the visual below, there’s a big difference between the 6 years prior to the housing crash and the most recent 6-year period of time. Leading up to the crash, we had much higher appreciation in this country than we see today. In fact, the highest level of appreciation most recently is below the lowest level we saw leading up to the crash. Prices have been rising lately, but not at the rate they were climbing back when we had runaway appreciation.Think This Is a Housing Crisis? Think Again. | MyKCM

2. Mortgage Credit

The Mortgage Credit Availability Index is a monthly measure by the Mortgage Bankers Association that gauges the level of difficulty to secure a loan. The higher the index, the easier it is to get a loan; the lower the index, the harder. Today we’re nowhere near the levels seen before the housing crash when it was very easy to get approved for a mortgage. After the crash, however, lending standards tightened and have remained that way leading up to today.Think This Is a Housing Crisis? Think Again. | MyKCM

3. Number of Homes for Sale

One of the causes of the housing crash in 2008 was an oversupply of homes for sale. Today, as shown in the next image, we see a much different picture. We don’t have enough homes on the market for the number of people who want to buy them. Across the country, we have less than 6 months of inventory, an undersupply of homes available for interested buyers.Think This Is a Housing Crisis? Think Again. | MyKCM

4. Use of Home Equity

The chart below shows the difference in how people are accessing the equity in their homes today as compared to 2008. In 2008, consumers were harvesting equity from their homes (through cash-out refinances) and using it to finance their lifestyles. Today, consumers are treating the equity in their homes much more cautiously.Think This Is a Housing Crisis? Think Again. | MyKCM

5. Home Equity Today

Today, 53.8% of homes across the country have at least 50% equity. In 2008, homeowners walked away when they owed more than what their homes were worth. With the equity homeowners have now, they’re much less likely to walk away from their homes.Think This Is a Housing Crisis? Think Again. | MyKCM

Bottom Line

The COVID-19 crisis is causing different challenges across the country than the ones we faced in 2008. Back then, we had a housing crisis; today, we face a health crisis. What we know now is that housing is in a much stronger position today than it was in 2008. It is no longer the center of the economic slowdown. Rather, it could be just what helps pull us out of the downturn.

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If you are looking to buy or sell a home in the  Anderson or Greenville SC real estate areas, visit our website at www.SheilaNewtonTeam.com for tons of great information.

 

   
Sheila Newton   
Sheila Newton Team 
Berkshire Hathaway HomeServices -
C. Dan Joyner, Realtors
864-225-1205 (direct)
864-940-6377 (mobile)

www.SheilaNewtonTeam.com    


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Show All Comments
Rainer
223,707
Don Baker
Lane Realty - Eatonton, GA

Those are national numbers and do not neccessary reflect local markets.  And many people who had money in stocks and mutal funds saw big dips and perhaps won't be buying right now.

Apr 22, 2020 01:51 PM #1
Rainmaker
720,476
Laura Filip
Laura Filip Broker , Opening doors for All Seasons of Life - Whitesboro, TX
What can we do for you today?

Thank you for sharing with us, we appreciate the update for your market.

Looking at the positive side of the real estate market and looking for the best possible price points for both sellers and buyers. 

Apr 22, 2020 02:28 PM #3
Ambassador
2,974,281
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

Real estate is local.  In our second home/vacation home market it's really slow.  Will it be a crisis?  Time will tell.  I do think it won't be what last year is.

Apr 22, 2020 04:13 PM #4
Rainmaker
232,483
Realtyna Inc
Realtyna - Newark, DE
Realtyna- MLS RETS Integration software & services

Hi Sheila Newton Team Anderson & Greenville SC, thanks for this analysis. 

Apr 23, 2020 02:56 AM #5
Rainmaker
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Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Sheila - nice to "see" you back here.  It's good to hear your real estate business is still strong in your upstate South Carolina area despite what is happening around the world.  

Apr 23, 2020 04:23 AM #6
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