I’m letting the data speak for itself as I address fears of a housing crash.
The next time someone brings up their concerns about COVID-19 triggering another housing crash like what we experienced in 2008, you can ease their nerves with these five facts:
1. Supply. In 2007, when the housing market started to crash, there was 8.2 months’ worth of inventory nationwide. Today in our Charlotte market, the average days on market for all price points is around 45 to 60 days. We simply don’t have a crazy amount of homes competing against each other, and we also aren’t seeing nearly as many foreclosures.
2. Affordability. In 2006, 25.4% of peoples’ income went toward their monthly mortgage payment on a median-priced home. Today, mortgages are hardly as burdensome on the American family as they once were—only an average of 15.5% of a family’s income is going toward payments on a median-priced home.
3. Equity. In 2005 through 2007, people treated their homes like an ATM machine, taking out equity to buy boats, take extravagant vacations, or launch a lofty remodeling project. During those years, we totaled $824,000,000,000 in equity lines out on properties (yikes, talk about a red flag). From 2017 through 2019, we’ve only totaled less than half of that, with $232,000,000,000 out on properties—people have gotten wiser with their assets.
4. Appreciation. From 2000 to 2005, we witnessed an insane and unsustainable jump in home price growth across the nation. Around 2004, we saw double-digit increases! From 2014 to 2019, however, we saw moderate, steady growth. As of late, appreciation simply hasn’t been ballooning wildly, which is a good sign.
5. Lending. Looking back on 2006 through 2008, it seemed as though anyone with a pulse could qualify for a stated income mortgage. Lending practices were irresponsibly lax. In today’s market, however, it is extremely tough to get a loan; if you’ve recently applied, you know that the parameters for qualifying are much, much tighter than they were leading up to the ‘08 housing crash.
Now, I understand that unemployment is up drastically, but a lot of those numbers will be curtailed once the economy starts to reopen. Historically speaking, the housing market has actually been able to withstand most recessions; the Great Recession just happened to be an instance where factors in the housing market specifically led the entire economy downward. Thankfully, there’s plenty of reason to believe this current situation won’t lead to that same result.
If you have questions about anything I discussed, or are interested in buying or selling soon, don’t hesitate to reach out via phone or email. I’d love to hear from you!