How can we compare what’s happening nationally in the Real Estate Housing market right now in 2020 to when the market crashed in 2008. Well, finally some good news. According to N.A.R., the National Association of Realtors in August short sales and foreclosures accounted for less than 1% one percent of the sales. According to CNN Money, foreclosures were at a record high of 81% in 2008. That’s a drastic difference.
Hi, I’m Sherri Echols, Broker Associate with RE/MAX Bryan-College Station. What else is different, we have higher standards for loan qualification. If you look at this graph from the Mortgage Bankers Association, back in 2008 it was way easier to get a loan than it is today. In 2008 they had stated income loans, meaning you could just state what you made and they would take your word for it without ever checking. In 2020, the Mortgage Credit Availability Index shows how difficult it is to get a loan. Now they check and recheck employment, debt to income ratios, credit scores and so much more. Let’s explore what other scenarios make 2008 so different than today. Well, we had a surplus in housing back in 2008, there were more homes for sale than there were buyers and now we have a shortage of inventory.
In fact, According to Lawrence Yun, the National Association of Realtors chief economist “Shortages of homes for sale have proven problematic in the housing industry over the last few years, but have grown even worse in recent months. Just look at this graph from FRED Economic Research. Again, a drastic difference in inventory from 2008 to now, and remember when there is a surplus in inventory, that is a buyers market, which tends to cause prices to go down, however, when there is a lack of inventory like there is today, it is considered a seller’s market and tends to drive prices up. Well what about unemployment, according to Google, the U.S. The Bureau of Labor Statistics reported unemployment in August 2020 to be at 8.4 percent and back in 2008 unemployment was reported from the same agency at 6.1 percent, so definitely up, but unemployment does not appear to be up as drastically as it may appear. So, lots of facts and jargon. So what are your thoughts about how the housing market now in 2020 compares to the crash? In my opinion, it’s all of the factors that led to a significant decline in housing prices are very different from today and hopefully, even with all that we have going on in our crazy world right now, those differences will have a positive effect on the housing market.
This is your community market leader Sherri Echols, a helping hand for a happy home.