Worried about a housing bubble? Here’s 5 reasons why you shouldn’t be



The ten-year anniversary of the United States’ 2006 housing crash is just around the corner, and many Americans are getting worried. What with home prices now soaring above what they were in the bubble era, concerns are being raised that history might be about to repeat itself.

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But real estate industry experts tell The Street there’s no reason to worry, pointing to numerous factors about the health of the housing industry that indicate we won’t be seeing any bubbles for the foreseeable future.

Here’s five very good reasons why you don’t need to worry about a housing bubble:

1. Foreclosures are falling – Although bank repossessions recently increased slightly, just 2.1 percent of all existing housing loans are in foreclosure. This is the lowest level since 2007, says the Mortgage Bankers Association.

2. Fixed-rate loans are more popular – And this is a good thing, because if and when interest rates rise, this won’t cause as much shock with short-term Adjustable Rate Mortgages (ARMs) compared to back in 2008-2009. Back then, many homeowners saw their ARMs reset and found themselves unable to afford their monthly repayments, leading to a wave of loan defaults.

3. Construction is still flat – While that doesn’t sound like particularly good news, it is for existing homeowners. The lack of construction is one of the big reasons why housing inventories are at their lowest point since 2000, while the U.S. population has grown by 14 percent in that time. Meanwhile, new single-family home starts are 60 percent less than in 2006, which means we’re unlikely to see an oversupply of homes on the market anytime soon.

4. The growing economy – The U.S. has been steadily adding jobs each year for the last five years, and the quality of those jobs is improving too.

5. The resurgence of first-time buyers – New buyers are jumping into the market thanks to a number of special programs. Moreover, they’re being helped by agencies like the Federal Housing Administration, which this year reduced its annual mortgage insurance premiums by up to $900 annually. Experts predict that move could bolster home sales by as many as 5.6 million units. In addition, the National Association of Realtors believes the measure could help some 140,000 new buyers enter the market.

About Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at mike@realtybiznews.com.

Comments

  1. Wow, Mike, you are kidding, right? The propaganda in your article is truly astounding, but not surprising since most real estate companies and agents lie through their teeth to sell houses. Re/Max published a similar article yesterday and after reading that article it only made me distrust real estate companies even more. Of course now that the prices are artificially inflated in most major cities it makes sense that agents will want to make the bigger commission and get folks to believe the lie that if they buy now their house will not lose value up ahead. Well, there are a lot of Americans who are not fooled and who do read the real statistics and know that the economy is not recovering! America is on the verge of another recession and no matter how the media tries to spin it otherwise, the facts are real. I sold my house 6 months ago and refuse to buy another one (and I am a cash buyer) because I know my area is in a bubble and it will pop. I live in Northern Colorado and in 6 months housing prices went through the roof! Rents soared, too. How is this healthy and normal when the average wage here is $55K to $60K a year? Who can afford a $250K home or use up over half their income to pay for rent? How is this a healthy economy? Your statement is false. This takes me to your other false statement in # 5 where you discuss the resurgence of first time buyers. The government undid the tight restrictions on loans and lowered FHA loans to 3% down payment and other loans to “no down” with bad credit allowed! (This is fact and you can look it up.) This is exactly why the 2008 crash happened. Buyers were lured into toxic mortgages they could not afford. The “low” and “no” down payments were created so that buyers would buy those over inflated houses and put bigger commissions in the pockets of real estate agents and mortgage brokers and the banks. Yes, the same pattern is going on that went on right before the 2008 bubble burst. You are wrong. We are in a bubble! It will crash because these high prices are unsustainable to the average American who is struggling to get by. Inflation of food, energy, housing, Obamacare, etc has hurt the middle class and first time buyers. A reduction of mortgage insurance premiums will not save those people getting into those toxic loans! The high house prices does not mean we have a strengthened economy. It means that greed is still going on in high places and the little guy is being pushed to broke. If the economy was healthy the FEDS would have raised interest rates and retail sales at this time of the year would be good…but the FEDS continue to hee-haw about those rates and retail sales are not good. The oil bubble burst and so will the housing market again. Our nation is going into another severe recession and maybe if you tell the truth people like me will trust real estate companies instead of running from them.

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