National Association of REALTORS (NAR) Chief Economist Lawrence Yun took a deep dive to address your Housing Crash fears.

“It’s a valid question,” Lawrence Yun, chief economist for the National Association of REALTORS®, said Tuesday, December 13th, at NAR’s Real Estate Forecast Summit.

Anything can happen in today’s economy, given what we’ve seen over the last three years. But Yun identified five solid market fundamentals that suggest a crash is neither imminent nor looming.

Strong Labor Market

In the crash leading up to the Great Recession, there were 8 million job losses in a single year. Not only are there no widespread layoffs today, we’re still experiencing job growth that was essentially lost to the pandemic.

Tighter Lending Practices

Subprime loans were synonymous with the housing bust and those products no longer exist today. Not only is qualification criteria more stringent, appraisals and appraisal regulations remain one of the important checks and balances in a hot real estate market.

Inventory Shortages

The three months of inventory we now have in Sarasota County compares with the more comfortable pre-pandemic levels, but nowhere near the historic lows of .5 months we experienced during the buying frenzy. A major factor in today’s housing shortage is a decade of new home underbuilding following the recession. Prior to 2008, there were 7.6 million units built annually, compared to 4.6 million today.

Low Mortgage Delinquencies

With higher down payments and more skin in the game, borrowers are staying current on their mortgages. This has kept the current delinquency rate to just 3.6%, compared to 10% delinquency during the bust.

Less Than 1% Foreclosure Rates

With little to no skin in the game, homeowners walked away from their upside down mortgages in droves, topping a 4.6% foreclosure rate. The problem in Sarasota County was so profound that it created its own Short Sale subindustry. 

With more tightened lending qualifications including more equity, homeowners are much more protective of their investment. The current rate of foreclosures remains at a historical low of .6%. ‍

Want To Know More?

Now that you understand why our stabilizing real estate market is rooted in solid fundamentals, you’ll want to check out our companion piece: “3 Things To Know About Pricing In The Post Pandemic Real Estate Market.” You’ll see how we emerged from the biggest real estate market in history and where we go from here.