We'll compare current 2020 housing market with the housing market in 2008. As you'll see, we are in a very different situation right now. Current real estate market is in a much stronger position today than it was in 2008. It is no longer the center of the economic slowdown. In fact, housing could be just what helps pull us out of the downturn.
Home price appreciation is projected to slow down to 1.9% price increase on average. Boise real estate home price appreciation will slow down to 7.6 percent. Boise market will continue to be one of the strongest real estate markets. Click below for full report:
We'll look at different important factors that characterize the real estate markets 2020 vs. 2008:
1. Home Price Appreciation
When we look at appreciation in the visual below, there’s a big difference between the 6 years prior to the housing crash and the most recent 6-year period of time. Leading up to the market crash, we had much higher appreciation in this country than we see right now. The highest level of appreciation most recently is below the lowest level we saw leading up to the crash. Prices have been rising lately, but not at the rate they were climbing back when we had runaway appreciation.
2. Mortgage Credit Availability
The Mortgage Credit Availability Index is a monthly measure by the Mortgage Bankers Association that gauges the level of difficulty to secure a loan. The higher the index, the easier it is to get a loan; the lower the index, the harder. Today we’re nowhere near the levels seen before the housing crash when it was very easy to get approved for a mortgage. After the crash, however, lending standards tightened and have remained that way leading up to today.
3. Inventory of Homes For Sale
One of the causes of the housing crash in 2008 was an oversupply of homes for sale. Today, as shown in the next image, we see a much different picture. We don’t have enough homes on the market for the number of people who want to buy them. Across the country, we have less than 6 months of inventory, an undersupply of homes available for interested buyers.
4. Use of Home Equity
The chart below shows the difference in how people are accessing the equity in their homes today as compared to 2008. In 2008, consumers were harvesting equity from their homes (through cash-out refinances) and using it to finance their lifestyles. Today, consumers are treating the equity in their homes much more cautiously.
5. Homeowner Equity
Today, 53.8% of homes across the country have at least 50% equity. In 2008, homeowners walked away when they owed more than what their homes were worth. With the equity homeowners have now, they’re much less likely to walk away from their homes.
The current pandemic is causing different challenges than the ones we faced in 2008. In 2008, we had a housing crisis; today, we face a health crisis.