Credit stress data
When the next job-loss recession happens, we will see a rise in credit stress data and I am 100% sure the doomers of America will sit on their useless YouTube and X accounts, pushing their negative narrative nonstop. However, now that you have all the data, you can see that the credit stress data we saw in the 2008 crisis will never happen again as long as we have qualified mortgage in place. My crusade in the last decade was about ensuring lending standards are never eased because standards are already liberal today, but not crazy anymore.
The reason I fought hard for this premise is that when we do have economic stress such as we saw early in COVID-19 and with the big burst of inflation, homeowners will be shielded with their boring vanilla 30-year fixed mortgages.
With the data line below, I anticipated that we would return to pre-COVID-19 levels of credit stress by the end of 2024, but that never happened. Again, everyone pushing housing 2008 needs to snap out of it.
Please use these updated charts on credit data for your Thanksgiving dinner conversation and remember why this is so important. The new listings data we track with Altos Research is trending at the lowest levels ever during the past few years, while back then it was running at accelerated levels. Here is an example with our Nov. 9 data. Look at the difference between this week in 2024 versus the same weeks in 2009-2011. We had a lot of stressed sellers back then!
New listings data this week:
- 2024: 48,863
- 2009: 274,614
- 2010: 359,534
- 2011: 315,915
These credit-stressed sellers did not turn around and buy another home, so they created years of elevated distress supply in the marketplace. This hasn’t happened once over the last decade, nor will it until we see a job-loss recession. Also, back in 2010, over 23% of homes were underwater; today, it’s the lowest percentage ever.
Something else to consider: over 40% of homes right now don’t even have a mortgage and the loan-to-value levels for those that do are under 50% on average. In 2008, the loan to value was nearly 85%. Also, the median downpayment data for this year is 15%, which means homeowners have more skin in the game than back then.
Hopefully, all these charts will clear up the confusion for your Uncle Dave or any other Thanksgiving guests who think we’ll see another housing crash like 2008. The credit data for homeowners tells a different story.