Reasons Why Todays Real Estate Market Wont Be A Repeat Of 2006 Bubble

Dated: 05/09/2018

Views: 77

As I visit with people and/or overhear conversations, there seems to always be the question of when will this market turn? Not only when it will turn but will it be a repeat of the bubble we saw in 2006. That's the year I began my career and after that first year, we did see the bubble burst! It's taken a while but the real estate market is BOOMING! Here are FOUR reasons why this market is NOT the same as 2006.

1. Prices - You better believe the prices continue to climb and it has been a month-over-month increase for at least the last 24 months! The current prices have either reached or exceeded home prices in 2006 but based on inflation alone the homes should be higher.

2. Standards - Many people believe that the mortgage industry has began to ease their standards but there is still proof that today's standards are nowhere near as lenient as they were at the time of the crash when you could blow smoke in a mirror and get a loan.

3. Debt - Prior to the crash, people were using their home equity to as a "cash machine" with no regard to the impending consequences. The best indicator is the Federal Reserve Boards Debt Service Ratio. While it is at the LOWEST level in 38 years at 4.48%, in 2006 it was 7.21%

4. Affordability - Looking at the Housing Affordability Index by the National Association of Realtors, homes are more affordable now than ANY TIME since 1985! Can you believe that?

To sum it up, today's market is nothing like 2006!


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