Last night I made a truly terrible dinner. When I realized I didn't have all the ingredients for taco salad (a solid go-to at my house) I used the ground beef for hamburger patties and threw them on the stove (I know, not even grilled!). At a crucial point in the cooking, I got on the phone with my oldest daughter and all was lost. My inattention resulted in hamburgers that had the consistency of hockey pucks, fit only for our very large and undiscriminating dog.
Why do I share this domestic mishap? Because it reminds me that just having raw ingredients — or raw data — does not ensure a good outcome. How you cook those ingredients or interpret the data matters too. That's evident right now when you look at fears about a housing crash.
The raw ingredients are a run-up in home prices, another wave/surge of the pandemic and lots of talk about inflation. Throw that into the pan and people think it's 2008 all over again: housing is headed for a big fall.
Except it isn't.
In his latest article, Lead Analyst Logan Mohtashami walks through the factors that make the current housing market — even with rising home prices and pandemic job losses — so much different than 2008. These factors include a lack of speculation demand, high credit standards and creditworthiness, forbearance and more.
"The housing market we have had from 2014 to 2021 doesn't come close to any overheating credit boom or sales boom type of market," Mohtashami writes. "In fact, if we were able to capture all the home sales that we should have had last year, but were delayed due to the COVID-19 shutdowns, home sales would have been flat to negative this year. In 2021, every single existing home sales print has been higher than the total existing sales for 2020. This is because mother demographics is providing replacement buyers and keeping demand stable but not booming."
That's good news for homebuyers and sellers, real estate agents and lenders alike. No hockey pucks coming our way.
When you hear people say that the current housing market is like 2008 all over again, you may want to remind them of the huge differences between this market and that one. HW+ Premium Content
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