Demand Continues to Outweigh Supply

The graph compares housing supply during three different periods of time. The red bar shows there were 13 months of supply before the 2008 crisis, which was far too much. For context, the gray bar shows a balanced market with six months of supply.   Finally, the blue bar shows there are only 4.2 months of supply currently.

In other words, there are more people that want to buy homes than there are available homes to buy. Demand is significanlty greater than supply.  When this happens home prices stay steady - or rise - the very opposite of a housing market crash.

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“We simply don’t have enough inventory. Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”

This graph shows three different period of time of unemployment rates.  The red bar shows the 2008 financial crisis when unemployment was very high at 8.3%. The gray bar represent the 75-year average of 5.7%. And the blue bar represents the unemployment rate today.  It is much lower at just 4.1%.

As of now, people are working, earning an income, and making their mortgage payments. That’s one reason why the wave of foreclosures that happened in 2008 isn’t going to happen again this time.  Additionally, because many people are employed right now, many are actually in a position to buy a home.  This demand keeps upward pressure on prices.