Recession: 2008 vs Today
I am going to talk in this video about why today is different than 2008. Since that is the latest recession, and it was a big one, it is really still fresh on peoples’ minds. People tend to look back on their most recent experiences and try to compare how today is similar or different from then.
Reasons Why We Are Not Headed for Another Great Recession
- In 2008, the subprime meltdown was a result of a system that was laden with fraud, and was effectively caused by a system that was putting all kinds of bad loans out into the marketplace. Those who were doing business at that time surely remember the NINJA Loans: No Income, No Job, No Assets. They are not doing that these days.
- The equity that people have in their homes today is another difference. Today, 37% of American’s have no mortgage at all. Of the remaining 63% of Americans, 1 of 4 of those have over 50% equity in their homes. That means people are in a position where they are not over-leveraged like they were back in 2008.
- Financing is still very strict today. Nearly all banks are looking at credit, income and assets. There are some banks that let you get away with having two of those three. In other words, if you have bad credit, but great income and great assets there is still a loan for you. Or if you have no income, but great assets and great credit there are some assistance programs. But those are few and far between. Most banks are looking at credit, income and assets and are still putting your through a rigorous process to get you financing.
Because of these reasons, our system today is founded on a much more solid base of financing and equity. It is a much different market today than it was in 2008.