# Is the housing market headed for a repeat of 2008? By Opendoor Team | 2024-02-12 > Interest rates increasing and home sales are slowing. But that doesn't mean we're in the midst of a housing bubble. ## Key Takeaways ## Key Takeaways - Both 2007 and 2021 saw record home sales. - But the crash that followed in 2008 was characterized by a credit crunch, something that isn't likely to happen this time around. - 2008 saw an excess of housing, but in 2022 inventory is limited and people are still making their mortgage payments. It can be tempting to compare the frothy housing market of 2007 to today's market. Both 2007 and 2021 saw [record](https://www.zillow.com/research/sustainable-housing-demand-2021-not-2008-29424/) home sales and credit was generally easier to come by. However we probably aren't headed for another housing market crash, Opendoor Chief Investment Officer Daniel Morillo says. To understand why this is likely to be the case, let's take a closer look at the underlying financials. ## What happened in the 2008 housing market crisis? To identify what caused the 2008 housing crisis, it's important to understand market participants' way of thinking. Put simply, much of the economic fallout was caused by a lack of qualified buyers entering the market in droves. "People went from thinking, 'Ok do I want to live in this home and can I actually afford this home?' to thinking, 'it's a great time \[to buy a home\] because I can resell it and make a bunch of money,' only to find that trains run out," Daniel Morillo says. That train did run out, and it came in the form of a credit crunch. For much of the mid-2000s, less-qualified buyers were able to access mortgages for comparably low rates, and few lenders carried out the necessary due diligence to determine whether buyers could afford their homes. When buyers failed to make their payments, they were forced to offload their debts, causing a massive selloff. "2007 was a credit crisis," Morillo explains. "We’re not in a credit crisis \[now\]. People were forced into selling assets, including homes, \[and now\] that essentially has a 0% chance of occurrence...The economic and underlying setup which fueled 2007 which is the cascading of leverage effects just isn’t around." ## Are we headed for another recession? Most markets still experience volatility, even if we aren't likely to be headed for a crash. We probably aren't headed for a repeat of the 2008 housing market crisis, but we could still see a market downturn. "This isn’t 2007 \[but that\] doesn’t mean things can’t be bad or painful in other ways," Morillo says. "There’s plenty of history of other regular, non-credit crisis recessions that can be painful where people lose jobs and the market slows down." Whether or not we're headed for a recession is difficult to predict. But Morillo doesn't foresee a market downturn being as painful - or lasting as long - as the one 14 years ago. "The financial system is reasonably well capitalized," he explains. "The levels both for financial institutions and consumers are massively different from where they were \[in 2008\], in fact they’re better than where they were in the 1990s." Nobody can predict what the housing market is going to do. Supply is limited and prices have been historically high, but more responsible lending, along with legal and regulatory requirements put in place following the 2008 crash should help to prevent another global economic disaster. --- *Originally published at [https://www.opendoor.com/articles/2008-vs-2021-housing-market-bubble](https://www.opendoor.com/articles/2008-vs-2021-housing-market-bubble)*