Why Today’s Market Correction Isn't the Same as the 2006 Housing Slowdown

The 2023 housing market is characterized by slower home price gains, plummeting home sales, and whispers of a possible recession, all conditions eerily reminiscent of the 2006 run-up to the Great Recession. Despite a few clear parallels, experts say the housing market isn’t headed for another crash. In today’s market, there are more buyers than there are homes available, and that housing shortage is preventing prices from sliding to dangerous lows. 

In addition, today’s mortgages are much safer than those made more than 20 years ago, and the majority of subprime mortgages that led to the 2008 recession have largely been eradicated, Realtor.com reports.

“There are a lot of similarities that we should not ignore just because this time is different. … We do have some of our fundamentals that are out of whack,” says Ali Wolf, chief economist of the building consultancy Zonda. “But I don’t think it’s going to be a crash because the undersupply of homes is so different.”

But few expect another downturn would cut as deep as the Great Recession—or last nearly as long. Once the Fed gets inflation under control, it’s expected to cut rates to combat any turbulence in the economy. That will likely lead to lower mortgage rates, giving the housing market a boost. Many economists believe the housing market will begin recovering as early as next year, if not the year after that.

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