If you are on social media or watch the news, you have heard the real estate market is going to crash. So why isn’t 2022 like 2008? Here are just a few of the ways this year, and this recession is nothing like the last.

Let me address the elephant in the room before we dive into this. Yes, there will be a recession. It is already starting to hit. We see it at the gas pump and in the headlines that large corporations are starting to lay off large numbers of employees. These companies including Carvana, Better.com, Homie, and a few others.

A recession does not mean a housing market crash. Merriam Webster defines a recession as “a downward trend in the business cycle, one that is characterized by a decline in production and employment. This trend lowers household income and spending, which consequently causes many businesses and households to delay making large investments or purchases.”

That last line is key for individuals who have been saving over the last few years to purchase a home. Individuals who have not been planning for this will delay their purchase, setting up families who have been planning in a sweet spot!

Reason 1 2022 isn’t like 2008: Appreciation leading to a large amount of Equity.

There has been wild appreciation over the last 2 years, leaving the average American with around $185,000 in equity. Ok, that’s great, but what does that mean? Yes, we will see foreclosures starting to happen for families who took poor advice and not made payments during the pandemic. Instead of the foreclosure process being completed, individuals are able to list their homes and sell. With this additional equity, these families will be able to put deposits on a rental and start to build again.

Reason 2 this year is different than the last: Side Hustles and Additional Streams of Income.

The “side hustle” started during the lockdown. We all found a hobby or way to keep us entertained during the lockdown. It is amazing how many individuals have started a successful business out of these hobbies! This has set up families with a second stream of income! These businesses will hit 2 full years of tax returns when 2022 is filed! Which should qualify this business income to be used! This has also shifted the mindset of Millennials, which is the largest homebuying group, that there are other ways to earn a living besides working for large companies like our parents did in 2008.

Reason 3 it’s different: Inflation.

Lenders and the housing market caused the 2008 recession. Lenders were throwing money at America like it was Magic Mike. Homebuyers were not qualified the same way they are today. Today a buyer’s credit, income, and outstanding debt are analyzed in-depth. This happens even before a homebuyer can look at a property. Now cash buyers are a different story; they don’t have to worry about loans on those properties leading to a foreclosure. Today’s recession is caused by inflation and the government pushing large amounts of money into the economy to postpone the recession until after the lockdown. This wasn’t necessarily a “bad” move by the government. A recession when people can go find other jobs and leave their houses is better than a recession during a global pandemic.

So let’s recap why 2022 isn’t like 2008: Yes, a recession is going to happen. No, there will not be a wave of foreclosures and short sells. Yes, your side hustle is pay off if your taxes are done correctly! No, the housing market is not going to take a big dip.

These are just a few of the ways this recession is different than the last. If you have additional questions, let’s chat!