Why is 2022 different from 2008?

Housing market | mortgage rate news

Home builder CEO details why 2022 is different from 2008

CNN Business spoke to the CEO of Howard Hughes Corp., David O’Reilly. O’Reilly does believe that we’re already in a housing recession, but he doesn’t see the current situation as similar to the housing market crisis of 2008. The market in 2008 was massively oversupplied and borrowers were able to take loans that were more than the homes were worth. That’s not the case right now as supply is low, equity is high, and demand is fluctuating based on the market.

He has also observed that there’s been a migration from coastal cities to places in the American Southwest, and that has been a source of strength for the housing market.

ARMs making a comeback?

Borrowers applying for adjustable rate mortgages took up 12% of the applications in September according to the team at Yahoo Finance. That’s the 2nd largest share of the market for ARMs since March of 2008.

The difference is that regulations on adjustable rate mortgages are more strict now than they were when they helped start the 2008 housing crisis, and as long as lenders stay away from loans that have low standards, an ARM in 2022 could be a great way to get into a home without being locked into a higher mortgage rate for the long term.

Jobs data takes center stage

ADP released its jobs data for September 2022, and showed that the businesses added 208,000 jobs for the month. The final numbers were better than the 200,000 estimate and well ahead of the August numbers.

The Federal Reserve has stated that it expects to see a weakening in the jobs market as it continues to hike interest rates. The current data indicates that the jobs market is still adding positions, but there are rumblings that the next Fed rate hike could be the last of the year. The Fed changing course would be a welcome change for the housing and mortgage markets.

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