You may see plenty of news articles showing signs of economic slowdown, which may lead to people worrying about an upcoming housing crash. If you've seen what happened back in 2008, these feelings are totally understandable. While some things happening today are similar to the crash in 2008, there are also numbers showing that it's likely not going to happen.
There Is An Undersupply
While some people think that undersupply is a bad thing, it actually is one of the key reasons why the market won't crash. Constructions have been put to a halt for a long period of time, so there is surely not enough supply of newly built homes. Another reason is that not all homeowners sold their properties at the same time. Some are just listing today and others are still thinking about listing. Overall, the housing inventory in the market is lower historically.
Source: Keeping Current Matters and Calculated Risk
Simply put, there are not enough houses for housing prices to drop dramatically. According to the U.S. Census, about 1.4 million homes are about to be built this year, based on the current pace of construction. While this may seem like a big number, this does not compensate the demand for housing.
Improved Lending Standards
Standards have become tighter so, lenders are able to qualify borrowers well. Take a look at the graph below showing how foreclosures have declined over the years, especially after the launch of the Forbearance Program:
Source: Keeping Current Matters and ATTOM Data Solutions
Out of every five homeowners, four homeowners are coming out of forbearance either fully paid or worked out a repayment plan to prevent foreclosure. These are just some of the reasons why there won't be a wave of foreclosures coming to the housing market today.
If you have any questions or need help with anything related to real estate, reach out to Kyle Kelly of The Island Wide Team or any Island Wide Team member. Whether you are looking for properties on Long Island or wanting to invest in a property outside your hometown, we'd be more than glad to help. Our goal to help you find the best home.
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