Is this the next housing "bubble"??

Is this the next housing "bubble"?

The market that peaked in 2006 and plummeted through 2012 is recent enough to still be on people's minds, and bubble is a scary word, but given current home values significantly exceed those of the previous peak, it's a fair question to ask. The short answer, we really don't think so.

The case for those who say we are in a bubble is mostly built on the reasoning that we were in one before, and values are higher now than then, therefore we must be in one again. The first response you'll hear to negate that would be, yes but those past values were built on bad loans and today's values aren't. It's true, bad loans were a real part of the past problem and today's lending practices are much better. It wasn't the whole problem though, and there's better data than just saying banks don't make bad loans anymore to support the case against. 

For starters, an accurate comparison should account for inflation. Nominal home prices are indeed above the previous peak but adjusted for inflation, we're still below the '05-06 levels, look at those past prices in 2019 dollars!

No alt text provided for this image

Additionally, as we touched on a couple months ago, despite higher prices, affordability remains fairly strong, particularly with rates remaining so low. Here's an average payment charted with median price. The higher priced median home today still has a lower payment than the lower priced '06 home. 

No alt text provided for this image

Last, we like this one, good job Americans! It seems as a country we learned from mistakes of the past and no longer treat home equity as an ATM. Cash out loans are a quarter of what they were leading into our last housing crisis.

No alt text provided for this image

None of this is to say values can't go down. We've had a period of very strong growth, it could mean values go down at some point. In the least, the rate of appreciation is likely to slow, but it doesn't read like a repeat of a bubble.

Cheers to a healthy market!

-Ben

David Buchanan

Certified IAQ- Indoor Air Quality- Mold Investigations and Testing

5 年

Yes.

回复
Trent Haun

Customer Success @ Sigma | Driving Customer Growth

5 年

Interesting data, Ben!? Thanks for sharing!

要查看或添加评论,请登录

Ben Johnson的更多文章

  • Juicy Lucys and Home Buying 'Sight Unseen'

    Juicy Lucys and Home Buying 'Sight Unseen'

    Hey Friends, That subject line is Minnesota for you right now, a real estate market that's hotter than the cheese in…

    1 条评论
  • The "spring market" doesn't wait!

    The "spring market" doesn't wait!

    It feels like spring already, right? The weather..

    1 条评论
  • Just the facts

    Just the facts

    Every day there’s a new challenge, it’s been great to see how our team, our partners and clients have responded…

  • Local, real time, real estate updates, always fresh, never canned!

    Local, real time, real estate updates, always fresh, never canned!

    This week in Twin Cities real estate, April 21, 2020. An appropriate level of slow down.

  • What's Happening in MN Real Estate TODAY.

    What's Happening in MN Real Estate TODAY.

    What's happening today? The week of April 6th, 2020. You'll hear one agent say it's crazy busy, another say it's dead…

    1 条评论
  • New Rules for Marketing Homes, Coming Soon.

    New Rules for Marketing Homes, Coming Soon.

    The real estate industry is ever evolving, among recent interesting changes is the National Association’s (NAR)…

  • What's up with the instant offer thing?

    What's up with the instant offer thing?

    Hi Friends, 2020 has arrived! We hope your year is off to a great start. A lot of gym memberships are renewed this time…

    4 条评论
  • How's the market?

    How's the market?

    No matter the kind of market we're in, the questions we get most commonly are..

  • How's the market?

    How's the market?

    How's the market? The basics look good: Annualized appreciation is rolling along it the 5-6% range. Pending sales in…

  • We're always asked, how's the market?

    We're always asked, how's the market?

    Generally, pretty good! The media coverage is mostly positive, and rightly so. As you've heard me say before, the real…

社区洞察

其他会员也浏览了