3 Reasons Housing Market Is Not A Bubble

3 Reasons the Housing Market is NOT in a Bubble

With housing prices appreciating at levels that far exceed historical norms, some are fearful that the market is heading for another bubble. To alleviate that fear, we just need to look back at the reasons that caused the bubble ten years ago.

Last decade, demand for housing was artificially propped up because mortgage lending standards were way too lenient. People that were not qualified to purchase were able to attain a mortgage anyway. Prices began to skyrocket. This increase in demand caused homebuilders in many markets to overbuild.

Eventually, the excess in new construction and the flooding of the market with distressed properties (foreclosures & short sales), caused by the lack of appropriate lending standards, led to the housing crash.

Where we are today…

1. If we look at lending standards based on the Mortgage Credit Availability Index released monthly by the Mortgage Bankers Association, we can see that, though standards have become more reasonable over the last few years, they are nowhere near where they were in the early 2000s.

 

With housing prices appreciating at levels that far exceed historical norms, some are fearful that the market is heading for another bubble. To alleviate that fear, we just need to look back at the reasons that caused the bubble ten years ago.

Last decade, demand for housing was artificially propped up because mortgage lending standards were way too lenient. People that were not qualified to purchase were able to attain a mortgage anyway. Prices began to skyrocket. This increase in demand caused homebuilders in many markets to overbuild.

Eventually, the excess in new construction and the flooding of the market with distressed properties (foreclosures & short sales), caused by the lack of appropriate lending standards, led to the housing crash.

 

Where we are today…

1. If we look at lending standards based on the Mortgage Credit Availability Index released monthly by the Mortgage Bankers Association, we can see that, though standards have become more reasonable over the last few years, they are nowhere near where they were in the early 2000s.

2. If we look at new construction, we can see that builders are not “over building.” Average annual housing starts in the first quarter of this year were not just below numbers recorded in 2002-2006, they are below starts going all the way back to 1980.

3. If we look at home prices, most homes haven’t even returned to prices seen a decade ago. Trulia just released a report that explained:

“When it comes to the value of individual homes, the U.S. housing market has yet to recover. In fact, just 34.2% of homes nationally have seen their value surpass their pre-recession peak.”

Bottom Line

Mortgage lending standards are appropriate, new construction is below what is necessary and home prices haven’t even recovered. It appears fears of a housing bubble are over-exaggerated.

Posted on May 11, 2017 at 8:01 pm
Denice Neddo | Category: Buying, The Market Stats

Temperatures Are HOT & So Is the Real Estate Market

Temperatures Are HOT & 

So Is the Real Estate Market in the Portland – Vancouver area!  

If it seems like the Portland-Vancouver residential real estate market just keeps getting hotter, and hotter…..

it's probably because it is!  

Home sales are up, interest rates are down, and the economy looks pretty good.

According to the latest Market Action report from the Regional Multiple Listing Service, May saw more healthy real estate activity in the Portland metro area. Closed sales (2,942) showed a 18.5% improvement over the 2,483 closings posted in May 2014 and a 7.6% improvement over last month, April 2015. This was the strongest May for closings in Portland since 2006, when there were 3,054 closings posted for the month!  The STRONGEST MAY SINCE 2006!! 

And, it is not just Portland seeing these great numbers, Southwest Washington had an incredible May as well. Pending sales (920) showed a 23.2% improvement over the 747 offers accepted last May, and a 7.7% improvement over the 854 offers accepted in April. This was the strongest May for pending sales since 2005, when there were 1,130 offers accepted for the month.  

The Clark County, Washington real estate marketplace has some unique characteristics. There is a much higher proportion of active residential listings in Clark County that are Proposed, defined as "not yet under construction", than exists in any other RMLS™ area. This means that there are fewer homes listed as Active that are ready to move into in an immediate timeframe. According to the Regional Multiple Listing Serivce, Inventory in Months of Readily Purchased & Occupied Listings: 1.8.  That means if all of the homes listed for sale sold, and no others came on the market, they would all be gone in 1.8 months.

If you have thought about selling, now is the time!  Just look at the stats. 

Denice Neddo, Broker – Realtor 

360-607-4226 call or text me today, your home may be worth more than you think! 

 

Posted on July 8, 2015 at 5:29 pm
Denice Neddo | Category: The Market Stats | Tagged , , , , ,