Think This is a Housing Crisis? Think Again.

By Gardner Realtors | May 18, 2020

With all of the unanswered questions caused by COVID-19 and the economic slowdown we’re experiencing across the country, many are asking if the local housing market is in trouble. For those who remember 2008, it is certainly understandable to ask that question. However, it’s important to note there are a few key distinctions.

Many of us here in the Metro New Orleans, Greater Baton Rouge, and South Mississippi region experienced financial hardships back in ‘08. Perhaps you have friends or family members who lost homes and were out of work during the Great Recession – the recession that started with a housing and mortgage crisis. Today, we face a very different challenge: an external health crisis that has caused a pause in much of the economy and a major shutdown of many parts of the country. However, as GARDNER, REALTORS continues to report each week, there is still an active real estate market here at home. People are still buying and selling homes, and I’m proud to be a part of these dreams still becoming realities (albeit virtually). Yes, we are in a challenging time, but as GARDNER, REALTORS President and CEO Glenn Gardner wrote, the 2020 Housing Market is nothing like it was during the 2008 crash.


Let’s look at five things we know about today’s housing market that were different in 2008.

1. Appreciation
When we look at appreciation in the visual below, there is a big difference between the 6 years prior to the housing crash and the most recent 6-year period of time. Leading up to the crash, we had much higher appreciation in this country than we see today. In fact, the highest level of appreciation most recently is below the lowest level we saw leading up to the crash. Prices have been rising lately, but not at the rate they were climbing back when we had runaway appreciation.



2. Mortgage Credit
The Mortgage Credit Availability Index is a monthly measure by the Mortgage Bankers Association that gauges the level of difficulty to secure a loan. The higher the index, the easier it is to get a loan; the lower the index, the harder. Today we’re nowhere near the levels seen before the housing crash when it was very easy to get approved for a mortgage. After the crash, however, lending standards tightened and have remained that way leading up to today.

Mortgage Credit Availability



3. Number of Homes for Sale
One of the causes of the housing crash in 2008 was an oversupply of homes for sale. Today, as shown in the next image, we see a much different picture. We don’t have enough homes on the market for the number of people who want to buy them. Across the country, we have less than 6 months of inventory, an undersupply of homes available for interested buyers. Here at home, Glenn Gardner wrote:
“March 2020 MLS statistics for current housing inventory on the market in the Greater New Orleans region show only a 3.3 month supply (versus a 4 month supply in March of the previous year). This is considered a “neutral market’ meaning it’s currently neither a “buyer’s or seller’s market”. In 2007, there were far too many homes for sale nationwide which caused prices to tumble in most regions.”
4. Use of Home Equity
The chart below shows the difference in how people are accessing the equity in their homes today as compared to 2008. In 2008, consumers were harvesting equity from their homes (through cash-out refinances) and using it to finance their lifestyles. Today, consumers are treating the equity in their homes much more cautiously.


Home Equity



5. Home Equity Today
Today, 53.8% of homes across the country have at least 50% equity. In 2008, homeowners walked away when they owed more than what their homes were worth. With the equity homeowners have now, they are much less likely to walk away from their homes.




Bottom Line

The COVID-19 crisis is causing different challenges across the country than the ones we faced in 2008. Back then, we had a housing crisis; today, we face a health crisis. What we know now is that housing is in a much stronger position today than it was in 2008. It is no longer the center of the economic slowdown. In fact, it could be just what helps pull us out of the downturn.

Gardner President and CEO Glenn Gardner put it eloquently: “With all of the uncertainty in the world, let’s move real estate fears closer to the bottom of the list. We will continue to adapt, change and grow together, and we will be here (at least virtually, or in-person with six-foot spacing) when you need us.”


For more information on the housing market during these difficult times, please contact me, your local expert at GARDNER, REALTORS today!


Thank you to Keeping Current Matters for creating this blog.




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