Here are some best reasons that we are not heading toward a housing bubble:
- Foreclosure rates are down. A major cause of the housing crash last decade was the number of foreclosures that hit the market. According to ATTOM Data Resources, there were reported on 676,535 U.S. properties in 2017, down 27 percent from 2016 and down 76 percent from a peak of nearly 2.9 million in 2010 to the lowest level since 2005. Those 676,535 properties with foreclosure filings in 2017 represented 0.51 percent of all U.S. housing units, down from 0.70 percent in 2016 and down from a peak of 2.23 percent in 2010 to the lowest level since 2005.
- Mortgage standards have increased since the the last bubble. Originating a loan has become more time consuming because of the process of collecting volumes of information and documentation from borrowers and verifying everything to make sure the loan file is accurate. Lenders can pay big fines for originating faulty loans like they did during the bubble era. Now, lenders they are checking everything. However, this comes at a cost that is pasted on the home owners. Access to mortgage credit remains tight and making it too difficult for responsible borrowers to get loans. Before the housing crisis, lenders were making loans to people who couldn’t afford a mortgage. But now the opposite problem exists in the other direction. Mortgages today have default rates as low as you can possibly get. The following chart shows the histroical default risk associated with home mortgages:
In the Real Estate Market?
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