If you're still crossing your fingers for a housing market crash to make home prices drop, let's take a peek at the data. Spoiler alert: It's unlikely to happen. According to experts, home prices are expected to continue rising.

The current real estate market is quite different compared to before the housing crash in 2008. Let me explain why.

It’s Harder To Get a Loan Now – and That’s Actually a Good Thing

Hey, did you know that getting a home loan before the 2008 housing crisis was way easier compared to today? Back in the day, banks had looser lending standards, so pretty much anyone could easily qualify for a home loan or refinance one they already had.

Today, things have changed quite a bit for homebuyers. Mortgage companies now have higher standards that buyers need to meet. Check out the graph below that's based on info from the Mortgage Bankers Association (MBA). Basically, the lower the number on the graph, the tougher it is to secure a mortgage. On the flip side, the higher the number, the easier it is to get one.

The highest point on the graph indicates that, during that time, lending criteria were not as tough as they are today. This implies that lenders were willing to take on more risk with both borrowers and the types of mortgages they offered leading up to the financial crisis. As a result, there was a surge in loan defaults and a large number of homes being foreclosed and put up for sale.

There Are Far Fewer Homes for Sale Today, so Prices Won’t Crash

It's like this: back in the day, we had a ton of homes up for grabs because of the housing crisis. Prices took a nosedive with so many short sales and foreclosures in the mix. Fast forward to now, and we're facing the opposite situation - there aren't enough homes to go around.

Check out the graph below that compares the current number of homes available (in blue) with the housing crash (in red), using data from the National Association of Realtors (NAR) and the Federal Reserve.

Today, there’s only enough unsold inventory to last around 3 months. Back in 2008, we saw a peak with inventory that could last 10.4 months. This shows that the current market doesn’t have nearly as much inventory available, which means we shouldn’t expect home prices to drop drastically like they did before.

People Are Not Using Their Homes as ATMs Like They Did in the Early 2000s

Back when the housing market was heading for a crash, lots of homeowners were using the equity in their homes to fund things like cars, boats, and vacations. Then, when prices started dropping and there were too many houses up for sale, those same homeowners ended up owing more than their homes were worth.

Homeowners nowadays are being extra careful. Despite the recent surge in prices, they're not using their home equity as freely as they used to.

According to Black Knight, homeowners now have more tappable equity available than ever before, surpassing the previous record.

Homeowners have more equity than ever, which is fantastic news. They are way better off now compared to the early 2000s. According to a report by Black Knight, the current housing inventory is low, with only a 3.0-month supply of unsold homes. Back in 2008, we had a whopping 10.4 months’ supply. This shortage suggests that we probably won't see a dramatic decrease in home prices like we did in 2008.

“Only 1.1% of mortgage holders (582K) ended the year underwater, down from 1.5% (807K) at this time last year.”
— Black Knight

With homeowners in a better position these days, they will have choices to steer clear of foreclosure. This helps in reducing the amount of distressed properties entering the market. And when there isn't an overflow of available properties, prices are less likely to drop significantly.

Bottom Line

While you might be wishing for prices to go down, the data doesn't support that idea. The latest research clearly indicates that today's market is quite different from what it was last time.