Anyone who lived through the 2008 recession and subsequent housing market crash is likely feeling a little worried. After all, home prices have risen quite a bit in the past few years, and inflation is at a 40-year high.
But does that mean we’ll find ourselves in a situation similar to the late 2000s?
Likely not — because today’s market conditions are starkly different from what was happening in that period.
And in fact, the 2022 housing market is quite strong. Here’s why:
Demand far outweighs supply. Housing inventory is extremely low, and demand continues to surge. Demand will likely remain strong for the foreseeable future as the practices of remote work and buying and selling online continue. These two factors keep home values up and provide a steady stream of buyers as properties hit the market.
Lending standards are stricter. It was much easier to get a mortgage 15 years ago. After the crash, lenders created more rigorous standards for borrowers and the financial situation they need to be in to take on a mortgage. Due to these tighter requirements, most homeowners aren’t at risk of foreclosure if the economy heads toward a recession.
Homeowners have a lot of equity. The average homeowner gained over $55,000 in equity in 2021 alone. In the event of a recession, most homeowners could sell their homes and still make a healthy profit.
There’s no crystal ball to predict the future, but the housing market is on strong footing, even through the ups and downs.
Want to discuss your goals for buying or selling real estate in today’s market? Please reach out.