Broomfield Real Estate: Why We're Not on the Brink of a Housing Crash
By Yates Craig - October 13, 2023
If you've ever worried about a housing market crash reminiscent of the 2008 financial crisis, we've got some reassuring news, especially for those interested in Broomfield Real Estate and Broomfield homes. The housing landscape today is significantly different from what it was back in 2008. One critical factor setting the current market apart is the shortage of homes available for sale. Instead of an oversupply, we're currently facing an undersupply of homes. In order for a market crash to occur, there needs to be an excess of houses for sale, but the data indicates that's not the case. Let's delve deeper into today's housing inventory and explore why the situation in 2023 is far from resembling 2008.
Homeowners Deciding To Sell Their Houses
While housing supply has increased compared to last year, it still remains relatively low. The current months' supply of homes on the market is below the norm. The available inventory today is only about a third of what it was during the previous crisis. So, what does this mean for Broomfield Real Estate? Simply put, there aren't enough homes available to cause a significant drop in home values. To replicate the conditions of 2008, we would need a scenario where many more homeowners are selling their houses, but with very few buyers, and that's not the situation we're experiencing now.
Newly Built Homes
You might have heard discussions about the construction of newly built houses, which might make you wonder if homebuilders are going overboard. A historical look at the number of new houses built over the past 52 years reveals an interesting trend. Builders have not been constructing enough homes for quite some time, resulting in a significant supply deficit.
While the final blue bar on the graph indicates that home construction is increasing and approaching the long-term average, it's important to note that this won't lead to an immediate oversupply. There's a substantial gap to fill, and builders are being cautious about not overproducing homes, as was the case during the housing bubble.
Distressed Properties (Foreclosures and Short Sales)
Another source of housing inventory is distressed properties, including foreclosures and short sales. During the housing crisis of 2008, there was a surge in Broomfield home foreclosures due to lax lending standards that allowed many people to obtain home loans they couldn't genuinely afford. Today, lending standards have become much stricter, resulting in a higher number of qualified buyers and far fewer foreclosures.
In 2020 and 2021, a combination of foreclosure moratoriums and forbearance programs helped prevent a repeat of the foreclosure wave we saw in 2008. The forbearance program was a game-changer, offering homeowners options such as loan deferrals and modifications that were not available before. Data shows that four out of every five homeowners exiting forbearance have either paid in full or worked out a repayment plan to avoid foreclosure. These factors contribute to the assurance that we won't see a flood of foreclosures hitting the market.
What This Means for Broomfield Real Estate
For those interested in Broomfield Real Estate and Broomfield homes, the good news is that inventory levels are nowhere near where they would need to be for prices to experience a significant decline or for the housing market to crash. According to Bankrate, this situation is unlikely to change anytime soon, especially considering the strong demand from buyers:
“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”
Bottom Line
If you're concerned about a housing market crash similar to 2008, rest assured that the current conditions in Broomfield Real Estate and the broader housing market suggest otherwise. The shortage of available homes and various other factors indicate that we are not on the brink of a housing crash.
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