3 Graphs To Show This Isn’t a Housing Bubble

Abstract

There's a Shortage of Homes on the Market Today, Not a Surplus The supply of inventory needed to sustain a normal real estate market is approximately six months. For historical context, there were too many homes for sale during the housing crisis, and that caused prices to tumble. Mortgage Standards Were Much More Relaxed During the Crash During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. In the run-up to the housing bubble, some homeowners were using their homes as personal ATMs. Many immediately withdrew their equity once it built up. When home values began to fall, some homeowners found themselves in a negative equity situation where the amount they owed on their mortgage was greater than the value of their home. According to Black Knight: "In total, mortgage holders gained $2.8 trillion in tappable equity over the past 12 months - a 34% increase that equates to more than $207,000 in equity available per borrower...." With the average home equity now standing at $207,000, homeowners are in a completely different position this time.