Many Americans quietly fear another housing crash and foreclosure crisis like the one in 2008. Despite how similar it feels, economists point to a completely different market in 2023. For starters, in 2008, there were 8 million job losses alone. However, our labor market is strong right now and isn’t at a net loss.
Consider this as well: when the market crashed in 2008, lenders got rid of all the shady subprime loans that led to financial ruin for some borrowers. This helped stabilize the lending industry with better loans.
Additionally, the percentage of homes in foreclosure is presently at an all-time low of 0.6%. Compare that to 4.6% of homeowners walking away from their loans to foreclosure in 2008. The mortgage delinquency rate also happens to be at historical lows of 3.6% at the moment.
Finally, we are in an inventory shortage. New home construction has decreased from 7.65 million annual units to 4.6 million. Lack of inventory will always drive solid or elevated home pricing.
So while the overall market itself may be soft, it doesn’t mirror the factors from the Great Recession. In fact, lower inventory on the market has kept prices up almost 6% in comparison to October 2022 sales numbers.
The bottom line? Don’t sweat it. A little more patience or negotiation will be required with the right buyer, but you don’t need to be afraid to buy or sell in 2023.
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