This Housing Downturn Unlike The Great Recession's

New York, NY, December 19, 2022-"The pandemic housing boom is over. The bust will look nothing like the last one,” reports the Wall Street Journal.

“Before the financial crisis of 2008, lenders barely bothered to verify mortgage applicants’ income. Today they demand reams of evidence that borrowers can afford their loans.

“Banks once held big pools of shoddy mortgages with little consequence. Now such exotic debt securities hardly exist, and banks would find them too costly to hold anyway.

“Underwater mortgages have given way to hefty cushions of home equity, particularly after a run-up in prices over the past two years.

“A 28% decline in U.S. home prices between 2006 and 2009 sent the value of some 11 million homes below their mortgage balances, triggering widespread defaults, a near-collapse of the financial system and a deep recession. Home prices would have to fall between 40% and 45% from their peak to put the same proportion of mortgaged homes underwater today, according to a CoreLogic analysis.

“Mortgage rates have just about doubled since the start of the year, sapping demand and prompting some economists to pencil in year-over-year national price declines in 2023.

“Yet the redesign of the nation’s lending apparatus and overhaul of the financial system meant to insulate it better from economic shocks make a repeat of 2008 exceedingly unlikely, according to policy makers and bankers.”