What’s The Tea with 4D? 🍵

Guess what time it is? Tea time, of course! However, the only tea I'm interested in drinking this week is iced tea. Holy Hades in a handbasket! It’s hot tamales out there, folks. I hope you're staying cool and have a strong, resilient AC system. LOL!

So, let’s talk about the elephant and the donkey in the room, shall we?

Have you ever considered how an election year may impact the housing market and affect real estate? Well, much like the unintended consequences of politics in other realms, elections and their processes can definitely impact the real estate world!

How, you might ask? The election isn’t for several more months, and yet the buzz you experience post-debate, news coverage, and the candidates' activities... all of these things can stir up real estate reactions.

They can do so in the following ways:

• Policy Changes: Elections often bring changes in government policies, which can affect real estate. For example, new regulations on property taxes, zoning laws, and housing subsidies can influence real estate prices and development.

• Market Confidence: Elections can affect market confidence and economic stability. Uncertainty during election periods can lead to a slowdown in real estate transactions as buyers and sellers adopt a wait-and-see approach.

• Interest Rates: The outcome of an election can influence the central bank's decisions on interest rates. Lower interest rates can make mortgages more affordable, boosting demand for real estate, while higher rates can have the opposite effect.

• Infrastructure Projects: Elected officials often propose infrastructure projects, such as new roads, public transit, and community facilities, which can increase property values in affected areas.

• Foreign Investment: Elections can impact foreign investor sentiment. A government perceived as stable and business-friendly may attract more foreign investment in real estate, while political instability may deter it.

• Tax Policies: Changes in tax policies, such as capital gains tax or property taxes, can directly affect real estate investment decisions.

Overall, while elections themselves do not directly cause changes in real estate, the policies and economic conditions resulting from elections can significantly impact the real estate market, and our sanity as we watch things unfold.

While these changes can subtly affect your buying and selling processes, it doesn’t mean you have to wait until the election is over to make a change. I'm always here to talk it through!

Curious about the local market? Let's catch up and discuss your plans and questions. Your first coffee or tea is on me! 😊

Simply use the button below to choose a date and time that suits your schedule. Once booked, I'll personally reach out to confirm the location and we’ll go from there. Don’t wait—reserve your spot now and let’s get your real estate journey started on the right path.

Comparing Today’s Inventory to 2008: Three Graphs Highlighting the Differences

Even if you didn't own a home at the time, you probably remember the housing crisis in 2008. That crash impacted the lives of countless people, and many now live with the worry that something like that could happen again. But rest easy, because things are different than they were back then. As Business Insider says:

Here’s why experts are so confident. For the market (and home prices) to crash, there would have to be too many houses for sale, but the data doesn't show that’s happening. Right now, there’s an undersupply, not an oversupply like the last time – and that’s true even with the inventory growth we’ve seen this year. You see, the housing supply comes from three main sources:

• Homeowners deciding to sell their houses (existing homes)

• New home construction (newly built homes)

• Distressed properties (foreclosures or short sales)

And if we look at those three main sources of inventory, you’ll see it’s clear this isn’t like 2008.

Homeowners Deciding To Sell Their Houses

Although the supply of existing (previously owned) homes is up compared to this time last year, it’s still low overall. And while this varies by local market, nationally, the current months’ supply is well below the norm, and even further below what we saw during the crash. The graph below shows this more clearly.

If you look at the latest data (shown in green), compared to 2008 (shown in red), we only have about a third of that available inventory today. 

So, what does this all mean? There just aren't enough homes available to make values drop. To have a repeat of 2008, there’d need to be a lot more people selling their houses with very few buyers, and that's not the case right now.

New Home Construction

People are also talking a lot about what's going on with newly built houses these days, and that might make you wonder if homebuilders are overdoing it. Even though new homes make up a larger percentage of the total inventory than the norm, there’s no need for alarm. Here’s why.

The graph below uses data from the Census to show the number of new houses built over the last 52 years. The orange on the graph shows the overbuilding that happened in the lead-up to the crash. And, if you look at the red in the graph, you’ll see that builders have been underbuilding pretty consistently since then: 

There’s just too much of a gap to make up. Builders aren’t overbuilding today, they’re catching up. A recent article from Bankrate says:

Distressed Properties (Foreclosures and Short Sales)

The last place inventory can come from is distressed properties, including short sales and foreclosures. During the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to get 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 to show how things have changed since the housing crash: 

This graph makes it clear that as lending standards got tighter and buyers became more qualified, the number of foreclosures started to go down. In 2020 and 2021, the combination of a moratorium on foreclosures (shown in black) and the forbearance program helped prevent a repeat of the wave of foreclosures we saw when the market crashed.

While you may see headlines that foreclosure volume is ticking up – remember, that’s only compared to recent years when very few foreclosures happened. We’re still below the normal level we’d see in a typical year.

What This Means for You

Inventory levels aren’t anywhere near where they’d need to be for prices to drop significantly and the housing market to crash. As Forbes explains:

Mark Fleming, Chief Economist at First American, points to the laws of supply and demand as a reason why we aren't headed for a crash:

And Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

Bottom Line

The market doesn’t have enough available homes for a repeat of the 2008 housing crisis – and there’s nothing that suggests that will change anytime soon. That’s why housing experts and inventory data tell us there isn’t a crash on the horizon.