Will the Housing Market Crash? How This Market Compares to 2008

The housing market is heading into waters not charted in decades. We haven’t had to deal with several factors at play in a long time, including high inflation, rising interest rates, low supply, and rapidly increasing home prices. All of these factors beg the question, will the housing market crash?

Looking back at the 2008 housing bubble, the issues resulting in the recession seem obvious today in hindsight. However, at the moment, almost nobody saw the housing market crash coming.

The housing market today is different from 2008. Many will say the differences mean there will not be another housing market crash. However, a few factors make you wonder if history could repeat itself, just in a different way.

Will the Housing Market Crash?

Interest Rates

Rising interest rates don’t mean that the housing market will crash. If anything, the housing market may return to a more normal state. One where there aren’t 20 offers on most homes above the asking price.

Today, lending standards are much tighter than in 2008. As a result, the percentage of subprime mortgage originations has decreased significantly.

Tighter Lending Standards

Millennials have reached peak home-buying age as we are still digging out of supply shortages from the 2008 crash.

High Demand and Low Inventory

High Inflation

It’s tough to understand how inflation may impact house prices. However, one thing is almost inevitable, rising mortgage interest rates will limit home price increases to the clip we’ve seen over the past two years.

The 2008 market was propped up by bad loans when inventory was far outpacing the need for housing. However, there are a few wildcards at play that are unknown that could result in a crash.

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