It’s 2007 all over again. Get ready because we’re going to crash. We’ve been hearing this for five years, but here we are in a market with high prices and not much relief. Let’s look at why prices haven’t crashed like so many have predicted.
UPCOMING SPEAKING GIGS:
3/27/26 Prime Real Estate (private)
4/9/26 Realtist Association of Sacramento
4/14/26 Culbertson & Gray
4/22/26 EDCAR
4/28/26 PCAR Rocklin
5/7/26 Empire State of Mind
5/15/26 Nevada County TBA
6/3/26 Wisdom Wednesday in Elk Grove
8/6/26 PCAR Auburn
10/2/26 PCAR Rocklin
10/21/26 Coldwell Banker EDH
ACTIVE LISTINGS ARE NOWHERE NEAR 2008 LEVELS
In our largest local county, we had nearly 9,000 active listings at this time in 2008 compared with 1,500 today. Can you imagine how different the housing market would feel if we added 7,500 more listings? No wonder why prices haven’t been able to implode like back then since the supply situation is far different today.
NOT THE WIDEST GAP EVER BETWEEN BUYERS & SELLERS
There is so much talk about the housing market having the widest gap ever between sellers and buyers, but let’s check the fine print. Look, I really like much of what Redfin puts out there, but this narrative is a miss. There is a viral Redfin story about “the biggest gap on record” with sellers outnumbering buyers, but their stats only go back to 2013, so “biggest gap” needs to be taken with a grain of salt. The problem is people hear “on record” and assume it’s even worse than 2007 today.
ONE THING IS NOT LIKE THE OTHER
There is a massive difference today compared with the carnage of the Great Financial Crisis. I wish there were more data sources showing this online so we can have informed discussions. It seems like listing data from the GFC just isn’t available or shared for whatever reason. So, here’s some local flavor. What stands out to you?
ONLY VOLUME STATS ARE SIMILAR TO THE CRASH
I think people often flippantly compare today with 2007 without really looking into the numbers. Out of all the stats I follow, the only one that is similar to those days is the number of sales happening. Housing supply was exponentially higher in those days, it was taking over 100 days to sell compared to about 40 days lately, prices were tanking compared with softening a couple percent this past year, and the market was dominated by foreclosures (they hardly exist today). I don’t say any of this to sugarcoat the trend today, so save your hate mail. I’m only trying to say we need to be cautious about flippantly saying it’s 2007 again in the stats. This doesn’t mean there aren’t red flags to watch today either such as mortgage delinquencies.
THE MARKET HAS GROWN SOFTER THOUGH
The gap between listings and sales has widened in recent years, so I get people talking about the housing market being softer or prices dipping. But the gap between listings and sales has been nowhere wide enough in most areas to create quick price change like we saw in 2007 and 2008. So, maybe stop telling people we’re going to see a 2007 implosion with 2026 stats. Could we still see prices go down though? Of course.
One thing to continue to watch ahead is buyer and seller behavior in light of higher mortgage rates and gas prices (Iran War). I don’t think the local housing market has seen an inflection point yet in the stats from this, but if rates keep moving up and confidence moves down, that’ll show up in the numbers at some point. The positive news in recent months is we’ve been seeing sellers come back to the market this year after backing off in 2025. The hope is to see this continue since we need more supply if we ever want this housing market to heal and not feel stuck.
2007 ISN’T THE ONLY TIME PRICES DROPPED
Some people treat what happened in 2007 like the new template for every future housing market correction, but what happened then isn’t the new formula for every downtrend ahead. Locally, prices dipped in the early ’80s and ’90s, so it’s not like 2007 is the only example on record of prices ever dropping. Here’s a snippet from the Sacramento Bee in 1994 to show year-over-year downward price change.
The median sales price declined 24% during the early ’90s. I realize we are dealing with smaller numbers, but that’s what the market was like back then. Declines felt real to people back then, so be careful about looking at this with the benefit of knowing the future.
SUPPLY HASN’T BUILT LIKE IT DID BACK THEN
One of the huge differences between back then and today is supply began to build immediately in the summer of 2005. In fact, it tripled in one year. Meanwhile, prices dropped 6% during this time, but the bigger issue was how much supply was building in the background to set the stage for an implosion in 2007. In contrast, supply is still pretty limited today no matter how we look at it, and prices have dropped about 7% to 8% over the course of FOUR YEARS. Notably, we don’t have a ton of supply that has built to help create quick change ahead like we did back then.
I realize some people say, “But the crash looks different today. It’s a slow burn crash over many years.” Umm, okay, then let’s call it a correction instead since a crash by definition is something sharp and quick.
FOUR LONG YEARS AND THIS IS ALL WE HAVE
It’s been nearly four years since prices peaked in the local market. The median sales price is down 8% in the region from mid-2022, and Zillow’s price index for Sacramento is down about 7%. I’m not glossing over this decline, but it’s stunning to only be down this amount in the midst of glaring affordability issues. The x-factor for why prices haven’t dropped more substantially is a lack of supply. Sellers have not been coming to the market at normal levels and distressed inventory has hardly built. By the way, I find myself these days looking at lots of different price metrics to interpret change (not just the median or average).
NOTE: Don’t be rigid about saying prices are down this exact amount in every neighborhood and price range. Look to the comps.
CLOSING THOUGHTS
Let’s keep watching the market and being cautious about looking at things through a doom or rose-colored lens. Imposing a narrative on the market makes conversation boring for me when we’re stuck in polarizing positions instead of trying to interpret what is in front of us. The goal here is to let the stats form the narrative rather than impose a narrative on the stats. And right now, we can say the housing market has definitely softened in recent years, but it’s also nothing like 2007 in the stats too.
Anyway, I hope that was helpful. Thanks for being here.
Questions: What stands out to you most above? What similarities and differences do you see today with 2007? Anything to add?
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Ryan, Not sure how the narrative of “More home sellers that buyers — the largest gap on record” can be pushed at the same time as the narrative of “lack of supply”. Seem like opposite narratives.
Thanks for your hard work. Bob
Yeah, I do think they are somewhat opposite, but there are parallels too. On one hand, supply has grown in recent years (even locally), so we have seen the market soften. This is so important to talk about, and that’s the part of any housing narrative I can easily get behind today. But it’s not an all-time high gap between supply and demand, and that’s where I think the narrative is out of sync with the market.
Thank you for the analysis. I hope we don’t see another big 2007 crash. If it’s coming, it’s not here yet. Our government seems to keep trying to find ways to crash the markets. 😀 Maybe if our currency stops being the standard for world trade because it’s seen as unpredictable, that would do it.
Thanks, Gary. It’s a crazy world out there. So much uncertainty, and I wonder what else we will see this year. I wonder at times if the government has much of a plan. There are so many ideas regarding housing, but so little gets done. And then there is a recent housing bill supported by both blue and red that can have the consequences of less build-to-rent units. I don’t think the bill has been ratified yet, but it’s ironic how legislation that sounds good may not produce the intended results. For any onlookers, I like the idea of more build-to-rent units. Yes, institutional investors are building these, and we should not ban them from this type of a product. The benefit is we get more supply, and this is meeting a felt need in the marketplace.
I just had a client I called today to follow up with that said they’re going to take a step back because of the war.
Thank you, Marvin. I’ve heard a few stories like this. While I don’t know that we can quantify the Iran effect yet with the number of pendings, there is no mistaking stories like this are happening. People are concerned. Uncertainty was such a curve ball for the housing market in 2025 – especially with sellers stepping back from listings. And here we are today. Curve Ball 2.0 for buyers? I’m eager to see the stats over the next couple of months. Higher rates are a problem here too. If we had declining rates right now, I have a feeling that would help some people think past some of the uncertainty. The other stories I’ve heard so far are a VA buyer backing off in case he gets called for a tour, and some other first-time buyers maybe feeling some of the increased pain. For any onlookers, I’m open to hear what you’re seeing out there.
By the way, good to see you at Second Saturday.
Great post Ryan. I too never thought any pullback in the housing market would look like a 2008 style crash since (as you said) the underlying fundamentals are different. I always felt the biggest trigger for a crash this time around would be investor selling. Since the bottom around 2012, we saw a FLOOD of cash investors start buying up housing. There were the rich people from China, then companies like Blackstone, etc. I’m curious as to what your take is on this. Do investors still own a large chunk of Real estate compared to retail buyers? If so, they’d be sitting on a mountain of gains right now and if the right trigger comes along (say statewide rent caps, etc), would it not motivate them to all try to list at once? What is the probability of this happening? Thanks.
Thank you, Brandon. The thing about institutional investors locally is their heyday was 2012 to 2014. That’s even true in California as a whole. So, they are sitting on a ton of equity. Moreover, they have a well-oiled machine of a rental business, so it just doesn’t make sense for them to sell since they are making so much profit. Yet, they will sell non-performing assets. I do wonder about legislation coming out about institutions though. That could certainly influence some investors as to whether they want to stay in the market or not. The frustrating part to me though about some of the current legislation relating to institutional investors is the legislation penalizes build-to-rent companies also. And we could use more product. We don’t want to slow down these types of units from being built because we get more supply and this is meeting a felt need. There were about 50,000 build-to-rent units built last year in the country. In short though, institutions aren’t a huge factor in the market right now, and they don’t own enough to completely change the market either. Invitation Homes is the largest local investor, and they have more than 2,000 local units. But would they really list them all at one time? No way. These companies are way smarter than that. https://sacramentoappraisalblog.com/2023/12/04/this-one-company-owns-9000-homes-in-california-interactive-map/
By the way, here is a cool tool from the CA Public Library. If you click on the “Largest Owners” tab, you can see what I mean with institutions not purchasing much at all in recent years. https://public.tableau.com/app/profile/california.research.bureau/viz/CRB-SingleFamilyHousingRentals/MainView
One of the bigger mechanisms for decades ahead is probably demographics with Boomers aging. That should theoretically introduce more supply into the market.
Great analysis as always, Ryan. I’m no expert, but I don’t see prices crashing anytime soon.
Thanks, Tom. And congrats on sixteen years of blogging to you. Sweet 16!!
Yo Ryan
The only thing I disagree with is the statement, “Get ready because we’re going to crash. We’ve been hearing this for five years…” I’ve been hearing that we’re about to crash since I started paying attention real estate, probably around 1980.
There are ALWAYS people, and it seems to be over 50%, who ALWAYS say we’re about to crash, no matter what the market is doing.
I remember back in 2012, when the market started to rebound, people were warning ‘It’s only temporary’, and ‘we haven’t seen the worst of it’, ‘it will take 10 to 13 years for prices to recover, and finally, ‘we won’t see prices that high in our lifetimes!’
Thanks, Steve. Fair point. It’s not like this is a new statement. I guess I’m more referring to the massive narrative on social media that’s been so prominent over the past five years. Today, we have a play by play for housing, and it didn’t used to be like that with instant housing conversations every single day. Point taken though. And yes, there are some people who are hyper-focused on a coming crash. I think this shows up in other avenues of life too. We see this all the time with politics especially where people will get outraged over something that could happen, and then it becomes a nothing burger. And then there is a new thing to be outraged about the following week that also doesn’t pan out. I’m not saying we shouldn’t pay attention, but at some point we have to question who is benefiting from our outrage.
Some people make a living on crash narratives. And sometimes we learn who to follow and not follow based on stuff like this. For me, I don’t need people to always be right about their housing ideas about the future because nobody is going to be correct all the time. But it’s different when someone persistently comes to the table with an agenda or shtick. I think of Robert Kiyosaki as a good example (Rich Dad Poor Dad). He wrote a brilliant book, but he tends to make crash predictions over and over about lots of stuff, and I’m just not interested.
On a related note, I often wonder what doom voices would say if a crash did happen. My guess is the narrative would shift to talking about how they predicted the crash, and then it would be time to start talking about the next crash building, I guess. Rinse. Cycle. Repeat.
I do get concerned about doomerism as a whole in our society though. A sense of hopelessness is pervasive, and I think some people fixate on all that is going wrong or could go wrong in the future. And meanwhile people lose any sense of a hopeful outlook for a better tomorrow and they are robbed of any joy today. So, there are real consequences to embracing a paradigm where we only see doom. Granted, I don’t advocate for being naive or tuned out from real problems happening around us. But fixating on the worst-case-scenario constantly can be very damaging. I think of this often as I have two Gen Z sons who persistently hear about how hopeless everything is in the world from people who are selling fear for clicks. It’s almost like there is very little space to critique this mentality, and sometimes it seems controversial to be optimistic in the midst of everything that is happening today. We can’t let being hopeful go out of style though, and I think we need to recognize when people are making money off of selling us fear too. Let’s not buy their product.