The graph below uses data from ATTOM Data Solutions on properties with foreclosure filings to help paint the picture of how things have changed since the crash: Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures. Back in the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to secure a home loan they couldn’t truly afford. The last place inventory can come from is distressed properties, including short sales and foreclosures. Distressed Properties (Short Sales or Foreclosures) While this will add more inventory to the market, it’s not on pace to create an oversupply because builders today are more cautious than the last time when they built more homes than the market could absorb. Census, at today’s current pace, we’re headed to build a seasonally adjusted annual rate of about 1.4 million homes this year. It’s a sign they’re being intentional about not overbuilding homes like they did during the bubble.Īnd according to the latest data from the U.S. To avoid repeating the overbuilding that happened leading up to the housing crisis, builders are reacting to higher mortgage rates and softening buyer demand by slowing down their work. “It has become a very competitive market for builders where they are trying to offload any standing inventory.” Ali Wolf, Chief Economist at Zonda, notes:
But home builders are actually slowing down their production right now. There’s also a lot of talk about what’s happening with newly built homes today, and that may make you wonder if we’re overbuilding. And that level of activity simply isn’t there. There would need to be a flood of people getting ready to sell their houses in order to tip the scales toward a buyers’ market. There simply aren’t enough homes on the market to cause prices to crash. So, what does this mean? Inventory is still historically low. But compared to the same week in 2019 (shown in the larger red bar), it’s still down by 42.6%. Based on the latest weekly data, inventory is up 27.8% compared to the same week last year ( shown in blue). The graph below helps illustrate this point. Current Homeowners Putting Their Homes Up for SaleĮven though housing supply is increasing this year, there’s still a limited number of existing homes available. So, here’s a deeper look at where inventory is coming from today to help prove why the housing market isn’t headed for a crash. Distressed properties (short sales or foreclosures)įor the market to crash, you’d have to make a case for an oversupply of inventory headed to the market, and the numbers just don’t support that.Newly built homes coming onto the market.
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