While  talk of a housing slowdown  brings visions of the Great Recession home-price bubble and the calamity that it caused across the economic landscape, over the past few decades there have been a number of slowdowns, downturns – whatever name you want to put on them – that didn’t reach the level of what we saw a 10 years ago.

Because of mortgage rates that are inching up and sales and price statistics that are tailing off, the perception that the housing market is heading for another drastic drop has been analyzed to no end from all corners of the economic spectrum.

While some pundits and click-baters have painted a gloomy picture for this year and next in terms of what to expect in the housing market, the reality appears to be much more optimistic – especially compared to what we saw in the Great Recession.

According to information compiled and analyzed by Ralph DeFranco, the global chief economist at Arch Capital Services, Inc., a mortgage group in New York that issues regional home sales forecasts and predictive economic models, the sky is not falling on the housing market. He believes the current flattening of prices will lead to more of a soft landing compared with the strong upward trend of the past five years.

He cites some key economic points from Investopedia that seem to indicate a robust general economy and some housing factors that will lead to increasing demand moving forward. Some of these include total employment is at a record high; Federal spending remains up; the stimulus tax cut is adding dollars to the economy; the housing shortage continues; and mortgage rates are historically low.

We know that due to pressure from the Trump Administration, interest-rate increases are probably going to be few and far between in the near future, but the affordability issue of rising prices are going to curtail sales to an extent until incomes catch up. DeFranco admits that housing will slow down with the rising of rates, but it won’t be at a panic level.

“This will cause home-price growth to continue to slow, but a housing bust doesn’t seem imminent,” he noted. “Thanks to the strongest job market in 20 years, a shortage of housing and strong (but temporary) federal stimulus – at least for the next six to 12 months. In addition, mortgage rates are up but are still relatively low. Mortgages rates have been higher than today’s rates more than 80% of the time since 1970.”

DeFranco is calling it more of a correction to a market that has been somewhat overheated in the past few years, mainly due to the shortage of inventory.

“Even with higher mortgage rates and some markets now overvalued, solid economic growth, a healthy labor market and a shortage of entry-level homes should prevent material declines in home prices,” he added. “More specifically, national home prices could grow in the two to four percent a year range as long as the U.S. continues to have an overall healthy job market.

“Price growth has been too strong for several years, fueled in part by abnormally low interest rates. A mild deceleration in home sales and Home Price Index growth is actually healthy, because it will calm excessive price growth – which has pushed many markets, particularly in the West, into overvalued territory.”

The still-tight supply of homes for sale should keep prices from cratering, he notes, and the differences from 10 years ago include the fact that the country was over supplied with homes and the plentiful no-documentation loans that ended up tanking the housing market are a thing of the past.

In placing blame on the slowdown, DeFranco says the lack of affordable housing is the culprit. Rising prices and rates have increased the size of monthly mortgage payments needed to purchase a medium-priced home by anywhere from 7% to 26% over the past year. The National Association of Realtors’ Affordability Index is still 15% better than its historic average for the U.S. overall, but with more conservative loan products and homebuyers more cautious than pre-2008, many are holding back.

Another important factor that DeFranco points out is the difference today with 10 years ago. Or more precisely, he points out the difference of 10 years ago with the other slowdowns of the past few decades. Overwhelming bad loans and a declining job market formed the perfect storm then – today those two trends are not apparent.

Then you have this fact: today there are 1.3 million new residential units being built each year – while the demand calls for 1.5 to 1.7 million new units. The housing shortage is not going anywhere soon as it only increases – and with it you will likely see higher prices and a stronger market.

(Terry Ross, the broker-owner of TR Properties, will answer any questions about today’s real estate market. E-mail questions to Realty Views at terryross1@cs.com or call 949/457-4922.)