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Has the 2006 Housing Bubble Returned?

With home prices rising again this year, some are concerned that we may be repeating the 2006 housing bubble that caused families so much pain when it collapsed. Today’s market is quite different than the bubble market of twelve years ago. There are four key metrics that explain why:

  1. Home Prices
  2. Mortgage Standards
  3. Mortgage Debt
  4. Housing Affordability

Source: Keeping Current Matters

We can be confident that the 2006 housing bubble has not returned. Here’s why:

The Current Rise in Home Prices aren’t Like 2006
It is true that home prices are starting to mimic the trend of 2006. However, when inflation is factored in, home prices should actually be 18% higher than they are now. Good News! This is an indication that homes are still in the affordable price range.

Lenders Have Taken Preventative Measures to Avoid Defaults
There is a major concern that lenders will fall back to the “ease of lending” which lead to the previous housing bubble. Nonetheless, lenders have proven that their standards today have completely changed over time. With additional guidelines set in place, the banks have taken extra steps to prevent loan defaults.

Homeowners are More Responsible With Their Mortgage
The mortgage debt is significantly lower today at 4.48% than it was during the crash of 2006 with 7.21%. In the past, homeowners used their equity without planning. Today, a different approach to the market is emerging. Homeowners are starting to take advantage of the pricing trend by using their equity as a means to UPGRADE rather than waiting to sell.

The Market Remains Favorable!
Although home prices are increasing and mortgage rates are continuing to rise, the current market remains favorable to home buyers. According to the The National Association of Realtors®, the Housing Affordability Index proves that homeownership is more affordable today than in years past.

After considering all of the facts, it’s clear that the American dream of homeownership is still within reach!

Have You Considered What’s in The Market for YOU?
Investing your home’s equity is a responsible move to secure your future. Take advantage of the current trend and upgrade NOW! Connect with a Guarantee Realtor® today to learn more.


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