You don’t need to be worried about a housing market crash like 2008.

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Is the market going to crash? Are we in another housing bubble? We’ve had so many people ask us if we’re going to see a repeat of the market we saw back in 2008. There are three simple reasons why you shouldn’t be worried about that:

1. Supply is extremely limited. This is very different from what we saw in the lead-up to the 2008 crisis. If supply is low and demand is high, prices will naturally rise. In real estate, we measure supply and demand by “month’s supply of inventory.”

A balanced market is considered to have six months of inventory; anything less is a seller’s market and any more is a buyer’s market. From 2006 to 2008, the months’ supply actually swelled to over 11 months of inventory, yet prices continued to rise.

In stark contrast, for the last three years, we’ve been under five months of inventory. Our current months of inventory stands at 1.9 months, which is historically low.

“17.8 million mortgaged homes are considered equity rich.”

2. This time, the demand is real. Back in the mid-2000s, there was unfounded optimism that prices would simply continue to rise despite the fact that it was not grounded in any logical, market-backed information.

Mortgage money was easy to get. Look at the Mortgage Credit Availability index at 2:03 in the video above. The higher the index, the easier it is to get a mortgage and vice versa. In 2006, the index stood at over 868, but today the index stands at 122.5. Millennials (the largest generation in the country) continue to drive homeownership. They’re having families, upsizing, and buying their first homes.

3. Tons of equity in American homes. People aren’t using their homes as personal ATMs like they were prior to the 2008 crash. Right now, 38% of owner-occupied homes are owned free and clear. Moreover, 17.8 million of the 59 million mortgaged homes are considered equity rich, meaning that they have more than 50% equity in their homes compared to their value.

Here’s the bottom line:

• Housing supply is historically low

• Demand is real and rightly motivated

• Even if prices decline, there’s plenty of equity in Americans’ homes to weather the dip

If you have any questions for me about what’s going on in the market or real estate in general, don’t hesitate to reach out via phone or email. I look forward to hearing from you.