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A Housing Slowdown Is Underway, but This Downturn Is Nothing Like the Last One, Experts Say

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Market Data + Trends

A Housing Slowdown Is Underway, but This Downturn Is Nothing Like the Last One, Experts Say

The housing market is finally cooling off after a mid-pandemic hot stretch, but today's market is much more stable than the bubble and bust buying landscape of 2008


June 22, 2022
Red arrow pointing downward with homes falling
Image: Stock.adobe.com

A red-hot housing market is finally cooling down following consecutive rate hikes initiated by the Federal Reserve, but experts say that this downturn is nothing like the last one. Unlike the bubble and bust of 2007, today’s housing market is bolstered by much stronger lending regulations, record low mortgage debt, and a significant flow of tappable equity, which will provide a cushion for many homeowners as prices begin to fall.

Adjustable-rate mortgages were another major driving force of the housing market crash over a decade ago, representing 36% of all mortgages in 2007, but today, they account for just 8% of active mortgages, CNBC reports. 

There are currently 2.5 million adjustable-rate mortgages, or ARMs, outstanding today, or about 8% of active mortgages. That is the lowest volume on record. ARMs can be fixed, usually for terms of five, seven or 10 years.

ARMs today are not only underwritten to their fully indexed interest rate, but more than 80% of today’s ARM originations also operate under a fixed rate for the first seven to 10 years.

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