Houston Property Management: Why Today’s Housing Market is Not He
In recent times, concerns have been raised that the housing market might be headed for a crash. With the affordability challenges in the housing market and the ongoing talk of a recession in the media, it’s not hard to see why this worry exists. However, the data clearly shows that today’s market is very different from the one that led to the 2008 housing crash. So, Houston homeowners and property managers can rest assured that history is not about to repeat itself. Let’s explore the reasons why.
1. It’s Harder To Get a Loan Now
Back in the days leading up to the 2008 housing crisis, it was much easier to qualify for a home loan or refinance an existing one. Banks had different lending standards, which led to mass defaults, foreclosures, and falling prices. Today, borrowers face higher standards from mortgage companies. The Mortgage Bankers Association (MBA) data clearly shows that it is much harder to get a mortgage now, reducing the risk of mass defaults and foreclosures.
2. Unemployment Recovered Faster This Time
The pandemic caused unemployment to spike over the last couple of years, but the jobless rate has already returned to pre-pandemic levels. During the Great Recession, a large number of people remained unemployed for a much longer period. The quick job recovery this time around means that there is less risk of homeowners facing financial hardship and defaulting on their loans, putting today’s housing market on stronger footing.
3. There Are Far Fewer Homes for Sale Today
During the housing crisis, there were too many homes for sale (including short sales and foreclosures), causing prices to drop dramatically. Today, there is a shortage of inventory available, primarily due to years of underbuilding homes. Data from the National Association of Realtors (NAR) and the Federal Reserve show that there is only a 2.6-months’ supply of homes available, which means there isn’t enough inventory on the market for home prices to crash like they did in 2008.
4. Equity Levels Are Near Record Highs
Low inventory of homes for sale has contributed to upward pressure on home prices during the pandemic. As a result, homeowners today have near-record amounts of equity. This equity puts them in a much stronger position compared to the Great Recession, as explained by Molly Boesel, Principal Economist at CoreLogic:
“Most homeowners are well positioned to weather a shallow recession. More than a decade of home price increases has given homeowners record amounts of equity, which protects them from foreclosure should they fall behind on their mortgage payments.”
Bottom Line
The data presented above should ease any fears you may have about today’s housing market heading for a crash. Houston property managers and homeowners can take comfort in the fact that the current market is nothing like the one that led to the 2008 housing crisis. Stay informed and make educated decisions about your property investments to navigate the ever-changing real estate landscape.