The housing market is something that has kept many people shocked for the past couple years and with housing prices continuing to rise above levels that not many have seen in the past, it has many worries that we could be heading towards another housing bubble. There are many ways that today's market is significantly different than the bubble that hit the market over 10 years ago. Here are some reasons that show we are not headed towards another bubble.
1. Although, housing prices have reached those close to 2006 levels, research shows that after more than a decade prices would be way higher, based on inflation alone. "The inflation-adjusted U.S. median sale price in June 2006 was $247,110 compared with $213,400 in March 2018." According to CoreLogic.
2. One cause that had a major impact of the housing crash last decade was the number of homes that went on the market as foreclosures. This being said, this not only increased the supply of homes for sale but were also being sold at 20-50% discounts. This helped drive down all home values. The foreclosure numbers are much lower now than the were before the housing boom. According the the Federal Reserve's most recent report. In 2009, at the valley of the crash, the number of foreclosures were 566,180 and today the number is 76,480. These numbers are significantly different.
3. Many think that housing affordability is a far fetched idea and that this is a driving factor of the idea behind thinking that we are headed towards another bubble. Although, housing affordability is better now than it was prior to the last housing boom. According to CoreLogic, "the inflation-adjusted, principal-and-interest mortgage payments that homebuyers have committed to this year remain much lower than their pre-crisis peaks."
The gist of the story is, our housing market is in a very different place than it was in the prior decade with the housing bubble. Once looking at these items above, one can see that these markets are not as similar as some may think.