Why Hasn’t the Housing Market Crashed in 2024?

It’s 2024, and if you’ve been watching the housing market, you might be scratching your head and wondering why it hasn’t collapsed yet. With home prices still high and seemingly resilient, many expected a correction or even a crash similar to 2008. Yet, the market remains strong. So, what’s going on? Here’s a look at why the housing market has defied the odds and what it means for you as a potential buyer or homeowner.

1. Supply is Low, Demand is High

One of the key reasons why we haven’t seen a crash in 2024 is the tight supply of homes available on the market. Compared to past downturns, there are simply fewer houses for sale. After years of underbuilding, coupled with rising material costs and labor shortages, the housing supply has stayed limited, even as demand has grown. This scarcity of available homes creates competition among buyers, which in turn holds up prices.

High demand is partly driven by demographics—many Millennials and Gen Zers are at prime homebuying ages, and they’re eager to purchase homes. Add in factors like relatively low unemployment rates and continued interest in homeownership, and it’s clear why there’s sustained demand, even in a high-price environment. This demand-supply imbalance keeps the market strong, making a crash less likely.

2. Lending Standards Have Improved

The 2008 housing crisis was largely fueled by risky lending practices, with many buyers taking on subprime loans they couldn’t afford. In contrast, today’s lending standards are much stricter, thanks to reforms introduced after the last crash. Lenders are more cautious, ensuring that borrowers can genuinely afford their mortgages. As a result, we don’t have the same level of risky loans that were widespread during the previous crisis.

This means fewer homeowners are at risk of default, and fewer foreclosures enter the market. With fewer distressed properties for sale, there’s less downward pressure on home prices, which helps the market stay stable. While rising interest rates have made mortgages more expensive, they haven’t led to a wave of defaults because borrowers were, on average, vetted more carefully.

3. Rising Interest Rates Are Slowing Buying, Not Causing Panic

Interest rates have risen, making mortgages more expensive, which does impact affordability for many buyers. However, instead of leading to a panic or a rush of sellers, the result has been a more cautious market. Higher rates may cool demand somewhat, but they’re also discouraging current homeowners from selling, as many are “locked in” at lower interest rates from prior years. This is especially true for homeowners who refinanced during historically low rates in 2020-2021.

This combination means that while rising interest rates have slowed down the volume of transactions, they haven’t caused a surge in homes on the market or a drop in prices. The net effect? We’re seeing a more gradual market, rather than a free fall.

What This Means for Buyers

If you’re considering buying a home, you may be wondering if it’s wise to wait for prices to drop. But with low inventory and strong demand continuing to support the market, waiting for a crash could mean missing out. If anything, prices may remain stable or even increase, especially if the current supply shortage persists.

Today’s housing market presents a unique opportunity to buy, but it’s essential to be strategic. Consider your long-term goals, and focus on finding a property that fits your needs rather than holding out for a price drop. For many, this environment may be the perfect moment to enter the market—just ensure you’re buying within your budget, especially with higher interest rates in play.

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