Simple answer, no…
Kevin Erdmann at Barron’s delves into the big question on everyone’s mind right now. Are we repeating the excesses of the early 2000s, when housing prices surged before the market crashed? (Barrons)
- Since the foreclosure crisis never happened, the crash bros need to find their next reason to explain why the end is nigh. They’ve decided that rising prices are the catalyst for financial armageddon. Except there is just one problem. THE CONDITIONS ARE NOTHING CLOSE TO 2008. Lending standards have gotten stricter over the last year, demand has only gotten stronger, and occupancy levels continue to remain at historic levels.
- It’s all about inventory. Erdmann notes that many blame high occupancy levels in 2008 as evidence of overzealous building during the last boom. “But timing is key here. Decades of experience tell a clear story: Months of inventory is mostly a function of sales rather than builder speculation. When sales are strong, homes are turning over, and months of inventory tend to stay low. When sales quickly decline, builders tend to be left with unexpectedly high inventory.”
- It’s really all about the Fed. There is little reason to expect housing demand to collapse. If it does, Erdman argues it would come at the hands of the Fed. “…federal monetary and credit policies meant to create or accept a sharp drop in demand. And even if federal officials intend for housing construction to collapse, history suggests that a market contraction would push new sales down deeply for an extended period of time before prices relent.”
I highly recommend you read Erdmann’s full op-ed because he gets into some interesting points about the Fed leaving homebuyers out to dry during the crisis and why home appreciation in the mid to late aughts wasn’t as drastic as some made it out to be.
Sorry crash bros 🙁 Despite the constant fear mongering there does not appear to be anything close to a housing crash on the horizon.