Zillow Reports – Not Close to Housing Bubble

Zillow Reports: Not anywhere close to “Housing Bubble”

Svenja Gudell, Chief Economist with Zillow recently released information about where the economy was in relation to our last housing crisis. I have heard over and over from many individuals that we are on the verge of a Housing Bubble like unto when Housing Prices peaked in early 2006 and declined throughout the year. Svenja hit on some points though that counter this argument that I wish to share as well:

1.) They are seeing are very strong demands and very low supply of homes.

2.) The homes that are available for purchase tend to be more expensive homes.

3.) The number one hurdle they found with was coming up with the down-payment.

4.) ARM’s loans make up less than 10% of loans financed which is its lowest since the early 1990’s.

5.) Home prices are increasing dramatically and are not expected to reduce in value. They might slow down in how they are increasing, but the demand and low supply of homes is not expected to change.

6.) Home price increase continuation translates to less risk to investors.

7.) Millennials are buying homes a little later in life and renting for longer. This translates into skipping the “starter home” and going toward a home they can anticipate being in the full term of the loan.

8.) ARM loans might be a more viable option for those who don’t plan on spending more than 5-6 years in the home they wish to purchase.

 

These are some of the items that Zillow wished to convey to potential home buyers. What are you expecting to happen to home values in the near future? Do you feel strong demands and low supply of homes will keep property values at their current valuation?

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