Housing Inventory Levels Indicate No Crash in Near Future

Most everyone remembers the housing crash of 2008 regardless of whether you owned a home those days or not. The news circulating today about an economic downturn elicits feelings of concern by many that we could be headed for experiencing the same thing soon as we did back then. However, we can look at some important data and facts that prove that today’s housing market is not like it was then and one of the key components is inventory. 

Today’s void of supply of newly built homes, existing homes being listed by sellers and distressed properties are far from saturating the market which makes it unlikely to crash. Here is a closer look at each property segment.

Homeowners Listing For Sale

Despite any recent upticks in inventory there are still very few homes on the market for sale. According to data from Calculated Risk, inventory for the third week of August is 27.8% higher than last year in 2021 but is 42.6% lower than that of 2019. What this says is there isn’t enough housing stock to tip the scales to where home prices plummet resulting in a market crash. 

Newly Constructed Homes

New construction today is also going at a slower pace than what it was during the last bubble. Ali Wolf, Chief Economist at Zonda, states “It has become a very competitive market for builders where they are trying to offload any standing inventory.” Builders are reacting to the loan rate increases and are slowing down their production rate where they are being cautious about overbuilding. 

Distressed Properties

Another segment where a glut of inventory can come from is distressed properties which includes short sales and foreclosures. Years back during the last housing crisis there were many of these due to lax lending standards where today’s market is completely different and more strict. According to ATTOM Data Solutions in 2009 there were 2.8M foreclosure filings whereas in 2021 there were only 151k. In recent years the forbearance program was introduced for further assistance and to help prevent another wave of distressed properties like we saw last time around 2008. 

In conclusion these patterns and numbers show us that supply is not anywhere near where it would need to be for a crash to be in our near future.