Lately, it seems everyone is talking about the economy and whispers of a possible recession are spreading fast. But here’s the good news for homeowners in Brookings, South Dakota, and nearby areas: there’s no reason to panic. While we’re certainly facing some economic uncertainty, the current state of the housing market is far stronger and more stable than it was during the 2008 crash. Here’s a closer look at why we’re not headed for a repeat—and how Shane Andersen and the Brookings Home Team can help you navigate today’s housing landscape.
1. Demand for Homes Is Outpacing Supply
One of the biggest factors behind the housing crash in 2008 was an oversupply of homes. Back then, the market was flooded with properties, and there simply weren’t enough buyers to keep up with the inventory. This imbalance drove prices down and ultimately contributed to the crash.
Today, we’re facing a completely different situation. Right now, demand is outpacing supply, and that’s keeping the market competitive. A balanced housing market typically has a six-month supply of homes, meaning that at the current sales pace, it would take six months to sell all the homes available on the market. In Brookings, like many parts of the country, the current inventory sits well below that six-month mark, which shows strong demand is still a driving force.
The result? With fewer homes on the market, sellers have the upper hand, and prices have remained more stable. Buyers, on the other hand, are feeling the pressure to act quickly when they find the right property.
2. Employment Levels Are Steady, Keeping Homeowners in Their Homes
One major factor that fueled the 2008 housing crisis was rising unemployment. As people lost their jobs, many were forced to sell their homes or face foreclosure when they could no longer make mortgage payments. This led to a domino effect of foreclosures and price drops across the country.
In 2023, however, employment is looking stable, and the unemployment rate is significantly lower than it was in 2008. Most people are still earning an income, which allows them to keep up with mortgage payments and stay in their homes. This stability in employment is a strong indication that we won’t be facing a wave of foreclosures anytime soon. As long as people are working and able to pay their mortgages, we’re likely to see continued strength in the housing market.
3. Stricter Lending Standards Mean Safer Investments
Another big difference between 2008 and now lies in the mortgage industry itself. Leading up to the 2008 crash, lending standards were notoriously lax, with many buyers securing loans they simply couldn’t afford. Adjustable-rate mortgages (ARMs) and subprime loans were common, leaving homeowners vulnerable to default when their payments suddenly spiked.
Today’s lending standards are far stricter. To qualify for a mortgage, buyers have to meet stringent requirements, meaning they’re generally in a better financial position to keep up with payments. Additionally, many people have opted for fixed-rate mortgages, which offer predictable payments over time, protecting homeowners from sudden payment increases. This responsible lending environment is a safeguard that significantly reduces the risk of a housing market collapse.
4. Stronger Homeowner Equity Protects the Market
Another difference between today’s market and 2008 is the amount of equity homeowners have in their properties. Back then, many people owed more on their mortgages than their homes were worth, leading to a wave of underwater mortgages and forced sales.
Now, with home values having steadily risen over the years, many homeowners have built substantial equity in their homes. In fact, the average homeowner across the country holds significant equity, which serves as a financial buffer. This equity not only protects individual homeowners but also provides a stabilizing effect on the overall housing market, as fewer people are likely to be in a position where they need to sell at a loss.
Why the Brookings, SD Market is Unique
While national trends offer insight, real estate is fundamentally local, and Brookings, South Dakota, has its own unique market conditions. Our area enjoys a strong demand for housing, thanks to steady employment and population growth. Additionally, the community's tight-knit nature and proximity to key economic drivers make Brookings a highly desirable place to live.
For those looking to buy or sell in Brookings, having a trusted real estate expert who understands the nuances of our local market is key. Whether you’re a buyer trying to navigate competitive inventory or a seller considering whether to list, Shane Andersen and the Brookings Home Team are here to provide guidance tailored to our specific market.
Bottom Line: Today’s Market is Far Different from 2008
While it’s natural to be concerned when there’s talk of economic uncertainty, it’s important to keep in mind that the housing market today is much more stable than it was in 2008. With higher demand than supply, strong employment, tighter lending standards, and robust homeowner equity, there’s a solid foundation keeping the market steady.
If you have questions about the housing market in Brookings, SD, or want to learn more about how to make the most of these conditions, feel free to reach out to us at Brookings Home Team. We’re here to provide the latest insights, answer any questions, and help you make informed decisions about your real estate goals.
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