{"id":2416,"date":"2018-07-26T10:00:57","date_gmt":"2018-07-26T10:00:57","guid":{"rendered":"https:\/\/thezakariagroup.com\/4-reasons-why-we-are-not-heading-toward-another-housing-bubble\/"},"modified":"2018-07-26T10:00:57","modified_gmt":"2018-07-26T10:00:57","slug":"4-reasons-why-we-are-not-heading-toward-another-housing-bubble","status":"publish","type":"post","link":"https:\/\/thezakariagroup.com\/4-reasons-why-we-are-not-heading-toward-another-housing-bubble\/","title":{"rendered":"4 Reasons Why We Are Not Heading Toward Another Housing Bubble"},"content":{"rendered":"
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\"4<\/p>\n

With home prices continuing to appreciate above historic levels, some are concerned that we may be heading for another housing \u2018boom & bust.\u2019 It is important to remember, however, that today\u2019s market is quite different than the bubble market of twelve years ago.<\/span><\/p>\n

Here are four key metrics that will explain why:<\/p>\n

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  1. Home Prices<\/li>\n
  2. Mortgage Standards<\/li>\n
  3. Foreclosure Rates<\/li>\n
  4. Housing Affordability<\/li>\n<\/ol>\n

    1. HOME PRICES<\/strong><\/h4>\n

    There is no doubt that home prices have reached 2006 levels in many markets across the country. However, after more than a decade, home prices should be much higher based on inflation alone.<\/p>\n

    Last week, CoreLogic<\/em> reported<\/a> that,<\/p>\n

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    \u201cThe inflation-adjusted U.S. median sale price in June 2006 was $247,110 (or $199,899 in 2006 dollars), compared with $213,400 in March 2018.\u201d<\/em> (This is the latest data available.)<\/p>\n<\/blockquote>\n

    2. MORTGAGE STANDARDS<\/strong><\/h4>\n

    Many are concerned that lending institutions are again easing standards to a level that helped create the last housing bubble. However, there is proof that today\u2019s standards are nowhere near as lenient as they were leading up to the crash.<\/p>\n

    The Urban Institute<\/em>\u2019s Housing Finance Policy Center<\/strong> issues a monthly index which,<\/p>\n

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    \u201c\u2026measures the percentage of home purchase loans that are likely to default\u2014that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.\u201d<\/em><\/p>\n<\/blockquote>\n

    Their July Housing Credit Availability Index<\/a><\/em> revealed:<\/p>\n

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    \u201cSignificant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.\u201d<\/em><\/p>\n<\/blockquote>\n

    3. FORECLOSURE RATES<\/strong><\/h4>\n

    A major cause of the housing crash last decade was the number of foreclosures that hit the market. They not only increased the supply of homes for sale but were also being sold at 20-50% discounts. Foreclosures helped drive down all home values.<\/p>\n

    Today, foreclosure numbers are lower than they were before the housing boom. Here are the number of consumers with new foreclosures according to the Federal Reserve\u2019s most recent Household Debt and Credit Report<\/a><\/em>:<\/em><\/p>\n