Two Reasons Why the Housing Market Won’t Crash: Insights from Lawrence Team Homes, Chattanooga’s Top Real Estate Agents
In recent months, you may have heard conversations around the economy, with some people speculating about a possible recession. Understandably, this talk has led some to worry about a potential housing market crash. If you’re one of those concerned, we have some reassuring news – the housing market is not positioned for a crash.
As real estate journalist Michele Lerner explains:
“A housing market crash happens when home values plummet due to a lack of demand for homes or an oversupply.”
With this definition in mind, let’s look at two reasons why a housing market crash is highly unlikely right now.
1. Demand for Homes Is Higher Than Supply
One of the primary factors behind the housing market crash in 2008 was an oversupply of homes. But today’s market tells a very different story.
Generally, a balanced housing market has around a six-month supply of homes. When supply outpaces demand, it signals an oversupply, which can lead to declining home values. Currently, we’re experiencing only about a 4.2-month supply, meaning demand is outstripping supply. This keeps home prices stable or even rising – the opposite of a crash.
While inventory levels can vary from one market to another, most areas continue to experience a housing shortage. Here in Chattanooga, our market mirrors this national trend, with strong demand and limited supply.
Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), puts it simply:
“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.”
2. Unemployment Remains Low
During the 2008 crisis, high unemployment rates left many homeowners unable to make their mortgage payments, leading to foreclosures and short sales. Today, however, the employment landscape is much more stable. Unemployment rates are low, which allows homeowners to keep up with their mortgage payments and reduces the likelihood of forced sales and foreclosures.
People are working, earning steady incomes, and managing their mortgage payments – all of which support a more stable housing market. Furthermore, with so many people gainfully employed, there’s also a strong pool of potential homebuyers, which helps to maintain demand and keep prices steady.
Today’s Housing Market Is Stronger Than in 2008
It’s natural to feel concerned when you hear about economic uncertainty, but it’s essential to remember that today’s housing market is very different from the one that led to the 2008 crash. As Rick Sharga, Founder and CEO at CJ Patrick Company, explains:
“Literally everything is different about today’s housing market dynamics than the conditions that led to the housing crisis.”
Here at Lawrence Team Homes, we’re seeing the same positive trends locally in Chattanooga. The demand for homes continues to outpace supply, and employment remains strong. These key factors provide solid support for a healthy housing market.
Bottom Line
The housing market is much healthier than it was in 2008, but it’s important to remember that real estate trends can be very localized. If you have questions or want to understand how these factors are impacting our Chattanooga market specifically, feel free to reach out to Lawrence Team Homes, your trusted real estate experts in Chattanooga, Tennessee. We’re here to help you navigate the current market with confidence.
