Las Vegas Housing Market Isn’t Like 2008, learn why

You probably remeber the housing crisis in 2008, even if yo didn’t own a home at the time. That crash impacted the lives ofcountless ople, 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:

“Though many Americans believe the housing market is at risk of crashing, the economists who study housing market conditions overwhelmingly do not expect a crash in 2024 or beyond.”

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

New home construction

Distressed properties (foreclosures or short sales)

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

today's housing market isnt like 2008.

Homeowners Deciding to Sell Their Houses

Although the supply of existing homes is up compared to this time last year, it’s still low overall. And while this varies by local market, nationally, the current month’s supply is well below the norm, and even further below what we saw during the Las Vegas real estate market crash.

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.

What This Means for Homeowners

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.

The Impact on Home Prices

This low inventory means that home prices are likely to remain stable or even increase. Without a significant rise in the number of homes for sale, it’s difficult to see how prices could drop significantly.

National vs. Local Markets

It’s important to remember that while the national market shows low inventory, this can vary by local market. However, overall, the trend is that there are not enough homes to meet demand.

The Historical Context of Construction

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.

Catching Up on Construction

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:

“What’s more, builders remember the Great Recession all too well, and they’ve been cautious about their pace of construction. The result is an ongoing shortage of homes for sale.”