Tag Archives: #foreclosures

Why Today’s Housing Market Isn’t Like 2008

With another uptick in mortgage interest rates and all the media talk about a shift in the housing market, you might be thinking we’ve entered a housing bubble. But the good news is, that there’s concrete data to show why this is nothing like the last time.

There’s Still a Shortage of Homes on the Market Today, Not a Surplus

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Supply has increased since the start of this year, but there’s still a shortage of inventory available overall, primarily due to almost 15 years of underbuilding.

The graph below uses data from the National Association of Realtors (NAR) to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just a 3.2-months’ supply at the current sales pace, which is significantly lower than the last time. There just isn’t enough inventory on the market for home prices to come crashing down like they did last time, even though some overheated markets may experience slight declines.

3 Graphs Showing Why Today’s Housing Market Isn’t Like 2008 | MyKCM

On Cape Cod, there is a little over a two month’s supply of homes. While this is certainly an increase over past months, it’s not would be considered a normal market. So, with demand still strong and inventory tight, prices will remain steady. Decreases will come on a house-by-house basis determined by the initial asking price, condition, competition, buyer interest, etc.

Mortgage Standards Were Much More Relaxed Back Then

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.

Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. (Mari recalls going to closings where buyers signed paperwork for three loans!)

Today, things are different, and purchasers face much higher standards from mortgage companies.

The graph below uses Mortgage Credit Availability Index (MCAI) data from the Mortgage Bankers Association (MBA) to help tell this story. In that index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is. In the latest report, the index fell by 5.4%, indicating standards are tightening.

3 Graphs Showing Why Today’s Housing Market Isn’t Like 2008 | MyKCM

This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards over the past 14 years have helped prevent a scenario that would lead to a wave of foreclosures like the last time.

The Foreclosure Volume Is Nothing Like It Was During the Crash

Another difference is the number of homeowners that were facing foreclosure after the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM Data Solutions to help paint the picture of how different things are this time:

3 Graphs Showing Why Today’s Housing Market Isn’t Like 2008 | MyKCM

Not to mention, homeowners today have options they just didn’t have in the housing crisis when so many people owed more on their mortgages than their homes were worth. Today, many homeowners are equity rich. That equity comes, in large part, from the way home prices have appreciated over time. According to CoreLogic: “the total average equity per borrowers has now reached almost $300,000, the highest in the data series.”

Rick Sharga, Executive VP of Market Intelligence at ATTOM Dataexplains the impact this has: “very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure. We believe that this may be an indication that borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction.”

This shows that homeowners are in a completely different position this time. For those facing challenges today, many have the option to use their equity to sell their house and avoid the foreclosure process.

Bottom Line

So, if you’re concerned that the same decisions that led to the last housing crash are being made again, this information should help alleviate your fears. Concrete data and expert insights clearly show why this is nothing like the last time.

If you have questions and concerns, please let’s connect at 508-360-5664 or msennott@todayrealestate.com. We’re in touch with experts not only on Cape, but across the country. We’ll give you honest answers and help guide you to the best decisions for you and your family.

Please be careful tonight as trick or treaters will be out at the same time as many of us are coming home work. They’re not always easy to see, so please be careful, especially on dark streets.

Let’s make it a Happy Halloween.

Mari and Hank

A Bit of What We Learned in Dallas

Like many of you, we were dodging the downpours last week. Only we were in Dallas where the torrential rains flooded parts of the downtown stranding people in their cars with many needing to be rescued by first responders.

We were attending our seventh Success Summit, sponsored by the Tom Ferry organization. Ferry is consistently voted the leading trainer in our profession. He’s also an FOM. (Friend of Mari)

With us were about 25,00 of our colleagues from the States and around the world. (About 6,000 in person; the rest on live stream.)

We had an opportunity to network with other professionals and learn about where they work and what has been successful for them in helping their buyer and seller clients.

The conference itself provided a wealth of information about the status of the market and its somewhat confusing behavior. Bad memories of 2008, worse advice from inernet “experts” and relatives who know “a few things about real estate,” and the charged political atmosphere with the mid-terms looming have many concerned about a possible crash.

But, one of the key reasons why the market won’t crash this time is the current undersupply of inventory. Housing supply comes from three key places; 1.current homeowners putting their homes up for sale; 2. newly built homes coming onto the market, and 3.distressed properties (short sales or foreclosures)

For 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. 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.

Current Homeowners Putting Their Homes Up for Sale

Even though housing supply is increasing this year, there’s still a limited number of existing homes available. The graph below helps illustrate this point. Based on the latest weekly national data, inventory is up 27.8% compared to the same week last year (shown in blue). But compared to the same week in 2019 (shown in the larger red bar), it’s still down by 42.6%.

Why Today’s Housing Inventory Proves the Market Isn’t Headed for a Crash | MyKCM

So, what does this mean? There simply aren’t enough homes on the market to cause prices to crash. 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. And that level of activity simply isn’t there.

Newly Built Homes Coming onto the Market

There’s also a lot of talk about what’s happening with newly built homes today, as builders are actually slowing down their production. Ali Wolf, Chief Economist at Zonda, notes: “It has become a very competitive market for builders where they are trying to offload any standing inventory.”

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’s a sign they’re being intentional about not overbuilding homes like they did during the bubble.

But, with not enough new homes being built over the last several years, builder caution is not helping to increase supply as much as needed.

Distressed Properties (Short Sales or Foreclosures)

The last place inventory can come from is distressed properties, including short sales and 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. Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures. 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:

Why Today’s Housing Inventory Proves the Market Isn’t Headed for a Crash | MyKCM

So for those of you looking for a deal, your wait could be a long one.

The forbearance program during the height of the pandemic was a game changer, giving homeowners options for things like loan deferrals and modifications they didn’t have before. And data on the success of that program shows four out of every five homeowners coming out of forbearance are either paid in full or have worked out a repayment plan to avoid foreclosure. These are a few of the biggest reasons there won’t be a wave of foreclosures coming to the market.

With the real experts agreeing that, in general, prices will moderate, but not decrease, is it time to make your move? As many of you know, we did earlier this year selling our home of 28 years and moving to something that makes more sense for our current needs and lifestyle. You can, too!

Let’s connect at 508-360-5664 or msennott@todayrealestate.com. We’d be happy to share our experience as sellers and buyers, as well as more of what we learned in Dallas and how it can apply to your personal situation. Let’s talk soon.

With school beginning in many of our communities this week, please be aware of kids walking to school and waiting for the bus. Thanks…

Mari and Hank

Don’t Believe Everything You Read About the Housing Market

Many potential buyers and sellers have questions right now regarding the real estate market as we head into 2022. The forbearance program is coming to an end and mortgage rates are beginning to rise.

With this uncertainty, anyone with a megaphone – from the talking heads on your favorite cable news network to a lone blogger – understands that bad news is good for their business. So, we’ll be seeing a rash of troublesome and frequently uninformed headlines over the next few months.

Here are two recent ones you may have seen.

1. Foreclosures Are Spiking Today

There are a number of stories circulating that highlight the rising rate of foreclosures. Those stories focus on an overly narrow view on that topic: the current volume of foreclosures as compared to 2020. They emphasize that we’re seeing far more foreclosures this year compared to last.

That seems rather daunting. However, though it’s true foreclosures have been up over the 2020 numbers, it’s important to realize that there were virtually no foreclosures last year because of the forbearance plan. If we compare this September to September of 2019 (the last normal year), foreclosures were down 70% according to ATTOM.

Even Rick Sharga, an Executive Vice President of the firm that issued the report referenced in the above article, says: “As expected now that the moratorium has been over for three months, foreclosure activity continues to increase. But, it’s increasing at a slower rate, and it appears that mot of the activity is primarily on vacant and abandoned properties, or loans in foreclosure prior to the pandemic.”

2. Rising Mortgage Rates Will Slow the Housing Market

Another topic that’s generating headlines is the rise in mortgage rates.

Some people are expressing concern that rising rates will negatively impact the housing market by causing home sales to dramatically decline. The resulting headlines are raising unneeded alarm bells. To counteract those headlines, we need to take a look at what history tells us. Looking at data over the last 20 years, there’s no evidence that an increase in rates dramatically forces sales to come to a halt. Nor does home price appreciation come to a screeching stop.

Let’s look at home sales first: The last three times rates increased sales remained rather consistent. It’s true that sales fell rather dramatically from 2007 through 2010, but mortgage rates were also falling at the time.

We can also look at home price appreciation (see graph below). Again, we see that a rise in rates didn’t cause prices to depreciate. Outside of the years following the crash, prices continued to appreciate, just at a slower rate.

Don't Believe Everything You Read: The Truth Many Headlines Overlook | MyKCM

As we head towards the end of the year, there will no doubt be more misinformation as so called experts make their predictions for 2022.

If you have questions, please don’t hesitate to contact us at 508-568-8191or msennott@todayrealestate.com. We’re happy to be sure you have the correction information.


After a hiatus due to the virus crisis, we were able to resume our Client Appreciation Thanksgiving Pie Social on the Sunday before the holiday.

Our thanks to all our clients/friends who attended the event held at JDs Burger and Sushi in Sandwich. Always hospitable hosts, they kept the hors d’oeuvres coming as strangers became friends. One of the aspects of this event that we enjoy most is seeing people who didn’t know each other make plans to meet for dinner or visit at a later date.

We also donated any extra pies to the Sandwich Food Pantry, one of our favorite local non-profits.

We hope you enjoyed the holiday.

Mari and Hank