Are we headed for a

HOUSING

BUBBLE?

SCROLL DOWN & FIND OUT

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Things Look

oddly familiar...

kind of like a bubble is brewing!

1991 - 2006

2009 - 2021

Median Home Prices

You've probably seen the

HEADLINES

WHICH GRAB YOUR ATTENTION

THROUGH FEAR

Let's take a...

Closer look!

HEADLINES ARE JUST HEADLINES

But what do the articles say?

"But even if we're in a housing bubble, the Dallas Fed researchers don't think it would be a 2008 repeat. For starters, homeowners are in much better shape now than they were heading into the 2008 meltdown."

"The housing bubble period of 2004-07 was driven by easy money and subprime lending, and the current market is being driven by actual demand and cash.

"The housing market today is not driven by loose lending standards, sub-prime mortgages, or by homeowners who are highly leveraged," she says. "The house price appreciation in today’s housing market is supported by the fundamentals and characterized by a shortage of supply relative to demand."

~ Odeta Kushi, deputy chief economist at First American Financial Corporation

When you actually read the articles it becomes pretty clear...

THIS IS

NOT

2008

What is a

BUBBLE?

According to Wikipedia a bubble is...

β€œa situation in which asset prices are much higher than the underlying fundamentals can reasonably justify.”

Let's take a look at those underlying fundamentals...

MUCH LESS INVENTORY

Months Supply of Housing Inventory (Dec of each Year)

The National Association of Realtors (NAR) states that a balanced market with appropriate appreciation occurs at 6 months of inventory. With demand staying equal, prices will increase when supply is low.

Home Builders are Behind

Builders overbuilt during the bubble but pulled back significantly over the next decade. With supply chain and lumber shortages builders are way behind with an estimated shortage of 4,000,000 homes!

Far Fewer Foreclosures

New Foreclosures

COVID relief programs helped millions of homeowners avoid foreclosure and maintain their equity. In fact, there are less than 800,000 homeowners left in the program which means we will not see a repeat of what happened after the housing crash in 2008.

Tighter Lending RULES

Mortgages with Credit Score < 620 (in billions)

Mortgage standards are nothing like they were before the housing bubble popped. Purchasers that acquired a mortgage over the last decade are much more qualified.

NOT AS MUCH CASH OUT

Cash-Out Refis as Percent of All Mortgages

Loose lending guidelines prior to the crash allowed homeowners to borrow heavily against their equity, putting them into a precarious financial position when home values dropped causing them to spiral into a negative equity position. Today, lending guidelines have tightened significantly leading to less than half the number of cash-out refinances compared to 2006 .

More Buyers ARE coming

According to the National Association of Realtors (NAR) the average first time buyer is 33 years old. There was a significant drop in the number of buyers entering the market right before the crash in 2008 but the opposite is true today and will be for years to come.

AND A WHOLE LOT MORE EQUitY!

Changes in Home Prices

Over the Last Year
Over the Last 5 Years
Over the Last 30 Years
Previous slide
Next slide

According to Zillow, the total value of private residential real estate grew by a record $6.9 trillion in 2021. CoreLogic shows the average homeowner gained over $55,000 in home equity over the past year. More equity with less access to that equity means homeowners are likely to avoid foreclosure at all costs.

THIS IS

NOT

A HOUSING BUBBLE

THE BOTTOM LINE?

If you're waiting to buy you might miss out on...

0 %
Home Appreciation Over the Next Year

Average forecasts from CoreLogic (9.6%), HPES (9.0%), Fannie Mae (7.6%), MBA (6.6%), Freddie Mac (6.2%), NAR (5.1%)and Zeiman (3%)

$ 0
Home Appreciation in the Next 5 Years

Estimate based on $360k home purchased in Jan 2022

Source: Home Price Expectation Survey (Q4 2021)

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