Have you been hearing talk about a possible recession and feeling concerned about a repeat of the 2008 housing market crash? You're not alone, but here's some good news: the current housing market is in a much stronger position. Unlike 2008, where high supply and soaring unemployment drove a crash, today’s market is supported by two stabilizing factors.
1. High Demand and Low Supply Demand for homes today significantly outpaces supply, creating a balanced market. In 2008, there was a 13-month housing supply, which was a primary cause of the crash. Today, there’s only about a 4.2-month supply—well below the six-month benchmark of a balanced market. This high demand and limited supply keep home prices stable or rising, making a crash unlikely. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains, “We simply don’t have enough inventory.”
2. Low Unemployment Low unemployment also helps prevent another housing crisis. In 2008, unemployment was over 8%, leading to foreclosures and plummeting home prices. Currently, unemployment is much lower, around 4.1%, which means more people are able to make mortgage payments and even consider buying homes, contributing to the steady demand. Rick Sharga, CEO at CJ Patrick Company, points out that today’s market dynamics are vastly different from those that led to the housing crisis.
Bottom Line There’s no need to fear a housing market crash. With demand still high and unemployment low, today’s market is stronger than it was in 2008. But since real estate is always local, it’s wise to stay informed about your area. Connect with a real estate professional to understand how these factors may affect you locally.