When looking at today's housing market, some are seeing the inverse of the market leading up to the housing crisis. Where once there was housing oversupply and "creative lending", there is now a housing shortage crunching affordability.
In the run-up to the housing crisis, government-sponsored entities (GSEs) Fannie Mae and Freddie Mac produced about half of mortgage-backed securities on the market, whereas today, the GSEs produce nearly 90 percent of these securities, and have strict credit guidelines for the mortgages, Curbed reports. Data journalist Jeff Andrews concludes that should a housing bubble occur, it won't burst in the same way, "given changes to lending practices and the mortgage securitization chain."
Today, all this financial machinery still exists, with one key difference, subprime mortgage loans with adjustable rates aren’t being written at anywhere close to the same volume. This isn’t necessarily the result of newfound restraint by mortgage lenders and Wall Street bankers; it’s more a reflection of a housing market that’s the inverse of the one that existed in the run-up to the collapse.