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This Ain’t 2008 – Again


About 15 years ago, I turned my entire knee into butter while I was skiing at Squaw Valley (now Palisades Tahoe).

I was skiing with a bunch of way-too-cautious boomers that day, so I escaped during lunch to do one fast run.

Wanting to “get it out of my system” I skied down a steep run without turning… until I hit a rock that not only forced me to turn, it shredded my knee.

I was on the ground watching my foot flop around with zero resistance, when a friend (a Dr.) skied up to me and said “are you OK; you look ‘shocky,’” at which point I promptly went into shock (even though it was just a knee injury).

Having never had an injury of that severity, I was completely freaked out and to this day I ski with excess caution (much to the frustration of my kids) – even though there is zero reason to be as cautious as I am.

I tell that story because the 2008 financial crisis made the entire world excessively cautious about real estate in the same way.

Excessive caution is not justified because 2008 was an anomaly and today ain’t 2008!

  1. Housing Does Well In Recessions. As I reminded everyone in this June blog, housing typically does quite well during recessions, largely in response to rate drops (2008 was… wait for it… an anomaly).
  2. No Bad Mortgages/Foreclosures. 2008 started as a mortgage crisis that morphed into a housing/foreclosure crisis. This is because those mortgages effectively had no down payment or income documentation requirements, and they had horrible adjustable rate terms with huge prepayment penalties to boot. Today’s mortgages have far stricter guidelines – with respect to income, assets and/or down payments – so we will not see a foreclosure crisis.
  3. Record Equity. The average loan-to-value ratio in America is 42% right now – one of the lowest ratios ever. Nobody is going to walk away from their homes with that much equity – even if prices correct.
  4. Fewer Speculators and Flippers. These people dominated the market prior to 2008 and heavily influenced prices, but they represent a far smaller chunk of the market today.
  5. Recession By Intent. Today’s recession is by “intent,” as Brian Stevens of the NREP reminded us recently. The Fed is pushing us into this recession to curb demand in order to stem inflation. In contrast, 2008 came out of nowhere and caught everyone (especially the Fed) off guard.
  6. Inventory Remains Tight. This too is something that Brian Stevens addressed. Yes, inventory is increasing but it is coming up from record lows and we still have a 5 million+ housing unit shortage relative to household formations, per Mr. Stevens. The fact that builders are slowing down production will only exacerbate this.
  7. Unemployment Remains Very Low at 3.5%/Healthy Correction. Per Mr. Stevens, what we are seeing now is simply a healthy correction from last year’s frothy insanity; but we are not going to see a collapse in demand with so many people working.
  8. Institutional Investors. This is HUGE, as they did not exist in the 2008 housing market. Huge institutional investors, like Blackstone, are still buying homes in droves. Do they know something we don’t?
  9. Lower List Prices DO NOT EQUAL Depreciation. Zillow and Case-Shiller are still predicting appreciation over the next year in their latest reports. Much of the concern in today’s market is fostered by price reductions – which does not mean the market is crashing. It just means sellers are coming down to reality.


We had a family friend in the 1980s who wanted to tell everyone he owned a “million dollar home,” as that was a big deal back then. So, he listed his home for $1 million. It ended up selling for about $600,000 a year later, and he told everyone how soft the market was – when he really just listed his home for $400,000 too much. But, in his mind’s eye, the market dropped 40%. 😊

Jay Voorhees
Founder | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167