You might have heard rumors about an impending recession for quite some time. However, the economic landscape has been defying those gloomy predictions, particularly when it comes to employment and
Why the 2023 Housing Market Isn’t Deja Vu All Over Again
Dated: July 6 2023
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Worried about another housing crash? Here's the good news: today's market is not a replay of 2008. One big reason? The shift in lending standards. Let's explore this with some solid data.
Every month, the Mortgage Bankers Association (MBA) gives us the Mortgage Credit Availability Index (MCAI). This index is like a thermometer for mortgage health. The higher it is, the easier to get a mortgage. If it drops, getting a mortgage is tougher.
In 2004, the MCAI was at 400. By 2006, it was over 850. Today, it's different. Post-crash, stricter standards make mortgages harder to get.
Lax lending standards helped create the housing bubble. As Realtor.com puts it:
"In the early 2000s, it was easy to get a mortgage... many were given to people who couldn't afford homeownership."
The high peak in the graph indicates that pre-crisis, credit was easy to get, and loan requirements were lenient. Today, as per Bankrate:
"Lenders impose tough standards on borrowers... those getting a mortgage have excellent credit."
The MCAI has stayed low post-crash, indicating stricter standards. Joel Kan, VP and Deputy Chief Economist at MBA, confirms:
"Mortgage credit availability decreased for the third month... the MCAI is at its lowest level since January 2013."
This means we've moved away from risky lending practices that led to the 2008 crash.
In conclusion, today's tighter lending standards have reduced risk for lenders and borrowers. It's proof that this housing market is different from the last one. Rest assured, we're not reliving 2008.
Shaun Radcliffe
Experience the 'Amazon-like' real estate service with Shaun! Embarking on a journey to redefine excellence in real estate, Shaun created Radcliffe & Associates with one vision in mind: to lea....
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Based on information from California Regional Multiple Listing Service, Inc. as of September 27, 2023 2:28 AM UTC This information is for your personal, non-commercial use and may not be used for any purpose other than to identify prospective properties you may be interested in purchasing. Display of MLS data is usually deemed reliable but is NOT guaranteed accurate by the MLS. Buyers are responsible for verifying the accuracy of all information and should investigate the data themselves or retain appropriate professionals. Information from sources other than the Listing Agent may have been included in the MLS data. Unless otherwise specified in writing, Broker/Agent has not and will not verify any information obtained from other sources. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.
