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Monday, June 17, 2024

Comparing the Current Housing Market to the 1978 to 1982 period

by Calculated Risk on 6/17/2024 02:15:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Comparing the Current Housing Market to the 1978 to 1982 period

A brief excerpt:

In March 2022, I wrote: Housing: Don't Compare the Current Housing Boom to the Bubble and Bust
It is natural to compare the current housing boom to the mid-00s housing bubble. The bubble and subsequent bust are part of our collective memories. And graphs of nominal house prices and price-to-rent ratios look eerily similar to the housing bubble.

However, there are significant differences. First, lending has been reasonably solid during the current boom, whereas in the mid-00s, underwriting standards were almost non-existent (“fog a mirror, get a loan”). And demographics are much more favorable today than in the mid-00s.
Closed Existing Home SalesAnd I suggested we compare the current situation to the 1978 to 1982 period, and I discussed a few similarities between the periods (no comparison is perfect):

1. Demographics were similar

2. House prices increased rapidly.

3. Inflation picked up

4. The Fed raised rates to bring down inflation.

5. House payments increased sharply

Here is a review and a discussion of what this means for house prices.
There is much more in the article.