BY AMY SAVAGE, PRINCIPAL BROKER, A GROUP REAL ESTATE
One of the questions I get most often is “Are we in another housing bubble?”
It was just a decade ago that the U.S. housing market reached a bubble of epic proportions. There were too many homes being built and too many people willing to pay top dollar for them, many utilizing faulty mortgage products. When the bubble burst, millions of people lost their homes and their savings. Their credit was impacted and a lack of viable housing options made it difficult for many. Home prices dropped for almost six years.
Today home prices are about 1 percent shy of the 2006 peak. The difference today from a decade ago is that today’s prices are not a result of people over-spending on homes they shouldn’t financially qualify for. The prices today are being driven by a severe lack of inventory, as well as near record low mortgage rates. The lending guidelines now are much more regulated and stringent. The lenient loan qualifications and loan products we saw 10 years ago are no longer available. The perceived “bubble” the housing market is experiencing now is being driven by legitimate factors.
Until there is more inventory and/or interest rates start to increase, impacting affordability, the housing market won’t be experiencing a burst to the perceived “bubble” anytime soon.
Amy Savage is a top-producing Real Estate Professional with over 15 years of real estate experience. Where some Realtors may be more inclined to tell you what you want to hear, you can count on Amy to give you informed and objective feedback – backed by data, statistics and years of industry experience. You can reach her directly at 503.709.8039 or Amy@AGroupRealEstate.com.