Posts Tagged ‘housing bubble’

No Housing Bubble … Just Yet

Posted on August 17, 2017 by Laura Lam

As home prices continue to rise across the U.S., the dreaded b-word is beginning to be heard in some overheated markets.  However, many companies insist that despite the 8.3 million low-income residents who can’t afford their local rent, according to a new study from the U.S. Department of Housing and Urban Development, the housing market is still not in a bubble. The most recent Case-Shiller results pointed out the housing market is growing more expensive, however it is not about to repeat the bubble years.  Ten-X, an online real estate company, became the latest company to explain the housing market is not at risk of…

Homeownership Up From 50-Year Low

Posted on August 09, 2017 by Laura Lam

The U.S. homeownership rate climbed in the second quarter, a signal that the sharp downward spiral that began after the housing crash is finally reversing.  The homeownership rate hit 63.7% in the second quarter, the Census Bureau said, a jump of nearly a full percentage point from a year ago, when it touched a 50-year low of 62.9%. The share of Americans who own homes has climbed steadily since then.  The homeownership rate also edged up from the first quarter, when it sat at 63.6%. “The damage the [2007-09] great recession has done to the homeownership rate is likely reversing course,” said…

Home Prices Not Back To Pre-Crisis Levels

Posted on June 05, 2017 by Laura Lam

Home prices increase a little more each month, even hitting new peaks in many markets, yet experts insist they are not back at bubble-era levels.  The most recent Case-Shiller results show home prices rose 5.8% from last year to the highest pace in 33 months.  Black Knight also released its Home Price Index Report, showing home prices rose to a median $272,000 in March. This represents a new peak in home prices, and a rise of 2.3% from the start of the year. In fact, the chart from Calculated Risks shows home prices are nearing, if not level with, pre-crisis peaks, according to different measures of home…

Household Debt Hits New Record

Posted on May 23, 2017 by Laura Lam

Household debt is topping its 2008 peak prior to the housing crash. Total household debt has risen to $12.73 trillion in the first quarter, the Federal Reserve Bank of New York reported last week. However, Americans are handling their debt—mortgages, credit cards, auto loans, and other forms of borrowing – much better, the report shows.  Americans were delinquent on 4.8% of total debt in the first quarter. For comparison, at the end of 2009, 11.9% of consumers were delinquent on their debt by at least 30 days. The increase in household debt may indicate that more Americans are confident about…

Renters Finally Turning Toward Homeownership

Posted on May 04, 2017 by Laura Lam

The homeownership rate has been on the decline ever since the peak of the housing bubble a decade ago.  However, last month, the Census Department said American home ownership was 63.6% in the first quarter, down a bit from the fourth quarter of 2016, but up from a year ago, which is economists’ preferred way to gauge the data. According to Trulia Chief Economist Ralph McLaughlin, the number of owner-occupied households rose more quickly than renter households for the first time since 2006. The number of new owner households was up 850,000, compared to a 365,000 increase in the number of…

Auto Loan Defaults Not Likely to Cause Next Bubble

Posted on April 10, 2017 by Laura Lam

An increase in the delinquency of risky auto loans probably won’t send the U.S. economy into the doldrums the way the mortgage loan crisis did in 2008-09, but it will likely pinch car sales.  Borrowers are falling behind on most subprime car loans, but deep subprime consumers – those with credit scores below 550 – have deteriorated fastest, according to a report by Morgan Stanley. Just like mortgages, many of those loans have been packaged into bonds, “securitized” in Wall Street parlance, and sold across the world to investors searching for yields in the wake of the financial crisis. Car…

New Home Mortgage Apps Rise 3% in September

Posted on October 21, 2016 by Laura Lam

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for September 2016 shows mortgage applications for new home purchases increased 3% relative to September 2015. Compared to August 2016, applications decreased by 7%. This change does not include any adjustment for typical seasonal patterns. “After a strong start in 2016 and despite evidence of increasing costs, mortgage applications for new homes have maintained a pace modestly above 2015 rates,” said Lynn Fisher, MBA’s Vice President of Research and Economics. “The monthly decline in mortgage applications in September is largely attributable to typical declines in building activity this time of year….

Some Cities Still Drowning in Underwater Mortgages

Posted on September 21, 2016 by Laura Lam

More than 1 in 10 U.S. homeowners remain underwater on their mortgages.  This number is much less than a year ago and far lower than when the housing bubble burst in 2008 which left nearly a third in negative equity. But in some metros, the share of underwater homes is far higher in urban than suburban areas, reports Zillow. Even as the number of underwater homes keeps plunging nationwide, pockets of negative equity persist in some of the country’s largest metropolitan areas – primarily in the East and Midwest. Places like Cleveland, Detroit, Chicago and Philadelphia remain freighted with underwater homes…

Are House Prices Creeping Toward Bubble Territory?

Posted on May 23, 2016 by Laura Lam

A decade ago, a bubble in house prices led to the worst financial crisis since the Great Depression.  House prices then collapsed, falling below their long-term trend.  In recent years, however, as the economy has recovered, so have house prices. While they are still a long way from their 2005-2007 bubble peak, they’re also now once again far above their long-term average. There are two common valuation metrics with which to measure house prices: price-to-income and price-to-rent.  The chart above from Jeremy Grantham of GMO shows price-to-income for the past 40 years.  As you can see, for the last quarter of the 20th century,…

People Are Still Seeing Red Over the Housing Collapse

Posted on May 05, 2016 by Laura Lam

The nation’s housing markets may be finally getting over the foreclosure crisis, but for many Americans the anger hasn’t subsided.  This recent home sale in Florida may be the perfect encapsulation of the fury felt by some of the more than 5 million Americans served with a foreclosure notice after the housing bubble burst. This 5-bed, 4-bath home in the Lake Cypress Cove suburb of Orlando was valued at $2.7 million back in 2006. We all know what happened next – the collapse in U.S. home prices sent millions of Americans into foreclosure and sparked a Great Recession.  The house…