Low Inventory Levels Show No Crash in Near Future

Everyone likely remembers the housing crash of 2008 and the news circulating about an economic downturn brings up feelings of concern by many that we could be destined to experience the same thing as we did back then. However, we can turn to 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 low inventory 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 segment.

Homeowners Listing For Sale

Regardless of inventory increasing lately there are still very few 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 in 2021 but is 42.6% lower than that of 2019. This means there isn’t enough housing stock to tip the scales to where home prices fall resulting in a market crash. 

Newly Constructed Homes

New construction these days is also going 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 reacting to the loan rate increases and slowing down their production rate where they are being cautious about overbuilding. 

Distressed Properties

Another segment where a glut of inventory can come from is distressed properties which would be short sales and foreclosures. During the last housing crisis there were many of these due to lax lending standards where today’s real estate market is completely different and more strict. According to ATTOM Data Solutions in 2009 there were 2.8M foreclosure filings whereas in 2021 there were only 151k. In recent years the forbearance program was further assistance to help prevent another wave of distressed properties like we saw around 2008. 

Collectively 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.