Inventory Levels Show Unlikely Crash in Near Future

Everyone likely recalls the last housing crash of 2008 regardless of whether you owned a home or not. The news nowadays circulating about an economic downturn brings about feelings of concern by many that we could be destined to experience the same thing as we did back then. However, we can look at some data and facts that show that today’s housing market is not like it was then and one of the key factors is inventory. 

Today’s continued lack 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 of these property types.

Current Homeowners Listing For Sale

Despite inventory rising lately there are still very few active 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 but is 42.6% lower than the same week in 2019. What this means is there just isn’t enough housing stock to tip the scales to where home prices would fall to a point resulting in a market crash. 

Newly Built Homes

New construction today is also moving 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 respecting the mortgage rate increases and slowing their production rate where they are being cautious about overbuilding. 

Distressed Properties

Another area where a lot of inventory can come from is distressed properties including short sales and foreclosures. Years ago 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 as opposed to 2021 there were only 151k. In recent years the mortgage forbearance program was further assistance to help prevent another wave of distressed properties like we saw 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.