Why This Is Not Like 2008 Again

By
Real Estate Agent with Champion Real Estate Group 0561240

During the Great Recession, just over a decade ago, the financial systems the world depended on started to collapse. It created a panic that drove some large companies out of business (ex. Lehman Brothers) and many more into bankruptcy.

The financial crisis that accompanied the current pandemic caused hardship to certain industries and hurt many small businesses. However, it hasn't rattled the world economy. It seems that a year later, things are slowly getting back to normal for many companies.

Why is there a drastic difference between 2008 and now?

In a post from RealtyTrac, they explain:

We changed the rules. We told banks they needed more reserves and that they could no longer underwrite toxic mortgages. It turns out that regulation properly done can help us navigate financial minefields.

Here are the results of that regulation, captured in a graph depicting the number of failed banks since 2007.Why

What was different this time?

The post mentioned above explains:

In 2008 the government saw the foreclosure meltdown as a top-down problem and set aside 700 billion for banks under the Troubled Asset Relief Program (TARP). Not all of the 700 billion was used, but the important point is that the government did not act with equal fervor to help flailing homeowners, millions of whom lost their homes to foreclosures and short sales.

This time around the government forcefully moved to help ordinary citizens. Working from the bottom-up, an estimated 5.3 trillion went to the public in 2020 through such mechanisms as the Paycheck Protection Program (PPP), expanded unemployment benefits, tax incentives, and help for local governments. So far this year we have the 1.9 billion American Rescue Plan with millions of 1,400 checks as well as proposals to spend trillions more on infrastructure Bank deposits increased by nearly 2 trillion during the past year and credit card debt fell.

Bottom Line

Many have suffered over the past year. However, the economic toll of the current recession was nowhere near the scope of the Great Recession, and it wont result in a housing crisis.

 

 

Posted by

Shayne Email Signature

Comments (10)

Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Good morning Shayne! Great choice for a re post. So many folks forget these details

Jun 11, 2021 07:55 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Shayne, I remember so many agents getting second jobs and having a hard time of selling short sales.  Things are way different now.

 

Jun 11, 2021 09:03 AM
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Great information.  Thanks for sharing and have a wonderful day!

Jun 12, 2021 07:06 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Shayne - it is easy to compare things with the past but this is not a time with many toxic mortgages just some people who fell on pandemic hard times.

Jun 19, 2021 04:08 AM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Shayne. Money in the right places can cure a disease. Money in the wrong places only plugs a hole. Enjoy your day.

Jun 19, 2021 06:09 AM
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Good recap of the situation and why this is a very different time than 2008. Hope you're looking forward to a pleasant and productive weekend. D 

Jun 19, 2021 06:16 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Good overview of how things are different these days than in the Great Recession.

Jun 19, 2021 09:05 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Getting a handle on the lending practices and separating the appraisers from the lenders further corrected the issues.  This market is nothing  like the banking struggles

Jun 19, 2021 10:00 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Good Sunday afternoon, Shayne.

Have a special day and an outstanding week.

Jun 20, 2021 11:51 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Excellent post.  The fog a mirror get a loan days are gone and thankfully, due to low inventory, even if we do add inventory via forebearance, those too will be gobbled up!

Jun 29, 2021 06:54 PM