Why Experts Say the Housing Market Won't Crash

Recently I was asked if we were in a housing bubble.

These 3 keys points specifically address why we are not the same market as 2008.

1. Mortgage Standards Were Much More Relaxed Back Then.
Prior to the crash in 2008, it was much easier to get a home loan than it is today. Banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies. Lending guidelines are much stricter.

2. There’s Still a Shortage of Homes on the Market Today, Not a Surplus
Supply has increased since June 2022, but there’s still a shortage of inventory available overall, primarily due to almost 15 years of underbuilding homes and an access of buyers looking to move to our beautiful town. In Glastonbury, if a home has updates, nice yard, and location chances are pretty high there will be multiple buyers bidding. Instead of selling at 6% on average over-asking like last year - we are now seeing an average of 4%. (per MLS stats 10/30/2022)

3. The Foreclosure Volume Is Nothing Like It Was During the Crash.
Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. According to CoreLogic: “The total average equity per borrower has now reached almost $300,000, the highest in the data series. Very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure". There is a belief this is an indication that borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction.