Those who lived through the housing bubble 15 years ago may be experiencing a little déjà vu. Home prices are rising faster than wages, mortgage rates are low and homeowner’s have more equity in their properties than ever. All of these things were also true during the previous housing bubble that ultimately led to the Great Recession. But despite the similar circumstances, experts are largely in agreement that the U.S. housing market isn’t on the verge of another collapse.
While some industry experts think that prices will level out in 2022, they don’t believe homeowners in the U.S. are in for a hard landing. Much more stringent underwriting standards and regulations put in place in the aftermath of the 2007 recession should protect the housing market from the 20 to 30 percent price cuts previously seen.
The other major difference this time around is the lack of homes for sale keeping demand high even amid rising prices. In the early years of the new millennium, there was a home building boom that led to excess inventory and high vacancy rates that troubled the housing market for years.
Today, conforming no-point 30-year fixed mortgage rates are averaging 2.875 percent and 15-year rates are near 2.25 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.biz, social media (#AramcoReport), or over the phone at (877) 700-0942 and your questions may be featured in an upcoming article.
