Visuals To Prove That The Market Is Not Slowing Down Anytime Soon
Source: Keeping Current Matters
Last year, real estate had one of its best performances ever. However, many involved feared the market would collapse due to the pandemic. Despite their worries, home sales and prices were both up substantially over the year before. After 2020, many now fear the market’s exuberance mirrors that of the last housing boom and, as a result, we’re now headed for another crash.
However, there are many reasons this real estate market is nothing like 2008. Here are six visuals from Keeping Current Matters to show the differences.
1. Mortgage standards are nothing like they were back then.
The index shows that lenders were comfortable taking on high levels of risk during the housing boom of 2004-2006. It also reveals that today, the HCAI is under 5 percent, which is the lowest it’s been since the introduction of the index.
2. Prices aren’t soaring out of control.
The annual home price appreciation over the past four years compared to the four years leading up to the height of the housing bubble is displayed in the graphic below.
3. We don’t have a surplus of homes on the market. We have a shortage.
Today, there’s a shortage of inventory, which is causing an acceleration in home values.
4. New construction isn’t making up the difference in inventory needed.
If we compare today to right before the housing crash, we can see that an overabundance of newly built homes was a major challenge then, but isn’t now.
5. Houses aren’t becoming too expensive to buy.
Fifteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased, and the mortgage rate is about 3%.
Source: Keeping Current Matters
