The 2008 Housing Crash in 2022… Again?!

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With everything that’s going on in the world right now, there’s a recurrent concern about the real estate market as well. And many people believe that the housing bubble is going to pop at any moment. 

Today, I’d like to talk about the differences between the 2008 housing crash and the 2022 housing bubble.

Here are the four reasons why the housing bubble in 2022 is probably not going to be the same as the one in 2008. 

Wages have increased in tandem with housing prices

While it’s true that the housing prices have dramatically increased over the last few years, so have the wages. For example, in Fort Collins, the wages in 2008 were around $65,000 for a median household, whereas today they are about $96,000. 

Also, in 2008 we had an interest rate of about 6%. Right now we are increasing from 4% to 5% and maybe trending higher. So we are double the purchase price, but we do have a little less interest to pay on the property. **These numbers were updated to reflect April 2022 interest rates.**

Our inventory levels are about 25% of what they were in 2008

Another reason why 2022 is not the same as 2008 is our inventory levels. We had about 1400 homes monthly coming to the market back in 2008. Today, we have 330 homes coming onto the market monthly in 2022. 

Our population went from 140,000 to 175,000, which means we have extra 35,000 people competing for 25% of the number of homes that were coming onto the market.

Lenders more thorough in 2022 than in the 2008 housing crash

Today, lenders tend to dig much deeper into the buyer’s ability to afford these properties. They want to make sure that their buyers abide by specific standards. With that said, the buyers today are much stronger than the average buyer was in the early 2000s.

If you are looking to buy, plan on spending the majority of your time under contract providing documentation to your lender. THEN plan on providing supplemental documentation to your lender from there. Haha! Have fun!


Buyers are much stronger now

Without a doubt, buyers are more responsible and reliable than ever before. We’re not seeing foreclosures as we used to, not just in Fort Collins, but across the entire country. 

Another reason why I don’t expect another housing crash to happen is due to the amount of equity that an average American has in their home right now. 

Because people didn’t have the same amount of equity as today, a huge wave of inventory hit the market in 2008, further contributing to the housing crash. Luckily, that’s not the case right now. It would take significant factors to add the amount of inventory needed to begin to soften prices.

Final thoughts

The bottom line is that you never know what tomorrow may bring. Anything can happen! However, there are many reasons to believe that the housing bubble in 2022 is not going to be the same or ever happen as did in 2008.

Hopefully, this article helped you understand the main differences between 2008 and 2022. If you have any questions, feel free to reach out to Soukup Real Estate Services! 

In the meantime, check the full video below:

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