Not like 2008

George Lorimer
Wednesday, December 14, 2022
Not like 2008

San Diego County Housing Report

No Crash in Sight

Call or text George Lorimer at 619-846-1244

December 13, 2022 - Housing data illustrates that there is not a housing crash on the horizon despite the
current slowdown and home values falling. 
 


Not the Great Recession
With a very limited inventory of available homes coupled with over a decade of tight lending standards, housing values will
not nosedive like they did during the Great Recession. Click here to get a full copy of this report
 
An astonishing 41% of Americans think that the housing market is going to crash in the next 12 months, according to a survey conducted by LendingTree. Even more revealing is that 74% of those who believe there will be a crash think it will be as bad or worse than the “2008 housing market collapse.” With so many convinced that a crash is inevitable, does that mean that housing will once again collapse?
 
Everyone across the nation recalls watching the housing market take a brutal pounding during the Great Recession. So many homeowners were burned as values toppled and their equity vanished seemingly overnight. It either happened to everybody personally or they knew somebody who felt the severe impact of the downturn. It is understandable that whenever there is an economic slump, the general public immediately recalls the Great Recession and expects the housing market to tumble once again.
 
Everyone expected a housing crash in 2018 when rates rose from 4% to 5%, but it did not materialize. It did not crash after the initial lockdowns of COVID, yet so many were convinced otherwise. Once again, with mortgage rates rocketing higher, home values already on the decline, and a recession on the horizon, many Americans believe that the housing market is on the edge of a precipice and home values are about to plummet. Even though so many feel a housing crash is eminent, and that it could be worse than the Great Recession, according to all the economic data, current trends, lending standards, and the health and strength of homeowners across the United States, there is no crash in sight, not now, not in the next 6-months, and not in the foreseeable future.
 
The number one reason why a crash will not occur is that there simply are not enough available homes to purchase. When the inventory builds, it takes a lot longer to sell. When the unsold inventory rises above 200 days, negotiations lean
 
heavily in favor of buyers and home values fall rapidly. The unsold inventory in Los Angeles County, according to the California Association of REALTORS®, reached a peak for 2022 in July at 93 days. The peak for 2021 was 54 days, much faster than today. The 3-year average unsold inventory peak prior to COVID (2017 to 2019) was 123, a bit slower than today. In comparing today’s unsold inventory to the two years leading up to the Great Recession, 2006 and 2007, the difference is stunning. The unsold inventory peak in 2006 was 294 days, and it was 504 in 2007.
 
The unsold inventory remains much lower than in the years leading up to the Great Recession because the supply of available homes today remains at very low levels. The number of homes available today is 3,672.  While there were 51% fewer homes last year, 1,805, the 3-year average prior to COVID (2017 to 2019) was 5,905 homes, 61% more than today. The inventory has been stuck at anemic levels since the beginning of the pandemic. In comparison, the inventory in 2006 exceeded 15,000 homes, and it surpassed 18,000 in 2007. In sharp contrast to today’s lack of available homes, there was an inventory glut that led up to the Great Recession. download 
 

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