Home Prices Can’t Keep Going Up Forever Says Experts

 
With home prices climbing really fast, and the bidding wars becoming common, many buyers are forced to pay all cash leading to fears that the country will face another housing bubble resulting in a terrible crash.
Industry executives and economists feel this explosion in home prices is temporary as home prices can’t go above 20% year-over-year forever.
They say the housing market today is very different from the mid-2000s recession that damaged the economy.
The difference is a massive shortage of homes and home builders are being very cautious about adding new supply now.
Another major difference is that banks, home buyers, and regulators are not over-lending or overborrowing.
AnetaMarkowska, chief economist at Jefferies said in some ways this is an even hotter housing market than before the Great Recession because the risk of this turning into a bubble is much lower.
They observed that the current supply situation is opposite to the bubble period because back then, there was a massive overbuilding issue.
Around 2 million homes were being built per year, compared to the 1.6 million today. When there is excess supply the market crash, said Markowska.
The end of June 2021, saw just 1.25 million existing homes for sale which is close to 19% down from a year ago.
Lawrence Yun, chief economist at the National Association of Realtors said that we have a housing shortage and prices don’t decline in shortages.
According to data published by S&P CoreLogic Case-Shiller Indices in May, the home prices surged by 16.6%, rising from the 14.8% gain in April.
According to the NAR, in June the existing home prices continued to grow, leading to the median price for an existing home hitting a record $363,300, which is 23% up in the last 12 months.
Because of these price gains, the housing market is self-correcting.
According to data in June the new home sales unexpectedly dropped to the lowest level since April 2020.
Instead of paying the exorbitant prices, some prospective home buyers have decided to wait and rent which is a blessing in disguise, because home prices may be able to cool off as inventories rise to prevent a boom-bust dynamic said Markowska of Jefferies.
Reference Source: WTVA
https://www.compareclosing.com/mortgagenews/home-prices-cant-keep-going-up-forever-says-experts/

Comments

Public Feedback Requested By CFPB

The Home Mortgage Disclosure Act underwent certain changes and to evaluate whether it is meeting the stated goals of detecting discrimination in mortgage lending the Consumer Financial Protection Bureau is seeking comments. The CFPB requests for assessment of the mortgage disclosure law and checks if it meets the objectives of the Dodd-Frank Act . To abolish discrimination in mortgage lending in 1975 the Congress enacted . The bureau said the request comes after an August report found that mortgage lenders as compared to white applicants were charging higher interest rates and denying credit to Black and Hispanic applicants. The bureau said that with this evaluation the CFPB will be able to maintain a fair, competitive, and non-discriminatory mortgage market. They added that the assessment is an opportunity for the Bureau to get an idea if the earlier HMDA rulemakings have improved upon the data collected, thereby reducing loans on financial institutions, and streamlining and mo

What is an Appraisal Contingency? — Best Guide for Homebuyers

About Appraisal Contingency If a home is appraised for less than the purchase price included in the contract then there is a provision that is included in the purchase contract allowing homebuyers to back out of their contract this is termed as an appraisal contingency clause. Buyers who use financing to buy a house or are buying homes in areas where prices are volatile commonly use Appraisal contingencies. How do Appraisal Contingencies work? Purchase offers have appraisal contingencies inserted into them to notify the seller that the buyer intends to have the property appraised as part of their purchase for the financing process. If th e property doesn’t appraise for the amount the buyer offered to pay then this contingency allows them the option of backing out of the contract without losing their earnest money deposit or facing other penalties. During an appraisal, a licensed professional is hired by the homebuyer to examine the property and evaluate it against the recent sal

What is Fannie Mae and Freddie Mac?

Understanding Fannie Mae And Freddie Mac What is Fannie Mae and Freddie Mac? Fannie Mae or FNMA is a nickname for Federal National Mortgage Association. It was established in 1938. It is a Government-sponsored Enterprise (GSE). In 1968, Fannie Mae ceased to exist as a government entity and became quasi-governmental, federally charted corporation to buy mortgages other than those insured by the Federal Housing Administration, otherwise known as FHA. Freddie Mac or FHLMC is a nickname for Federal Home Loan Mortgage Corporation. Freddie Mac is also a government-sponsored enterprise (GSE) which was brought into existence in the year 1970 by the Congress. It provides competition to Fannie Mae and provides funds availability in the secondary mortgage market. What is Fannie Mae's and Freddie Mac's Role? Fannie Mae’s purpose is to create a secondary market for the purchase and sale of mortgages. The secondary mortgage market is where home loans and s

How to Use Home Equity for Remodeling Projects

Important Guide How to Use Home Equity Everyone has to live somewhere and, everyone has to invest their money in someplace. So what happens when where you live, meets up with where your money is invested? Today we are going to discuss on how to use home equity for remodeling projects and things to know before using it for remodeling. For most homeowners, it is a choice between paying cash or borrowing against the equity that they have build up in their home. HELOC Or HEL? Interest rates are still significantly low, and we are not sure how long they are going to stay that way. And home values are still rising at least on average. So taking out a home equity line of credit (HELOC) or a Home equity loan (HEL) may seem like a sensible financial move. Not always the case We have explained the difference between the HELOC and HEL in our blog post “ About Home Equity Loan / Home Equity Line Of Credit .” It depends on the individual’s needs to choose between t

COMPARE CLOSING LLC

Search This Blog