Yes Home Prices Are Rising. No a New Housing Bubble is NOT Forming
blog-single-post-photo.jpgimage_shadow.png

Yes Home Prices Are Rising. No a New Housing Bubble is NOT Forming

Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming | Keeping Current Matters

We recently reported that home prices are continuing to rise across most of the nation. This has created concern in some pundits that a housing bubble, like we saw ten years ago, is forming again. We want to explain why these concerns are unfounded.

The current increase in home values can be easily explained by the theory of supply and demand. Right now, the number of families looking to purchase a home is greater than the supply of homes on the market.

Here is a chart that explains how the months’ supply of housing inventory impacts home values:

Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming | Keeping Current Matters

According to the latest Existing Home Sales Report from the National Association of Realtors, there is currently a four-month supply of inventory. That puts us in the blue section of the above graphic. Home prices should be appreciating.

The difference in 2006…

A decade ago, the demand for housing was artificially boosted by lending standards that were far too lenient. Today, the strength of the demand for housing is legitimate, as lending standards are nowhere near what they were a decade ago.

For proof of this, let’s look at a graph of the Mortgage Bankers’ Association’s Mortgage Credit Availability Index:

Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming | Keeping Current Matters

The higher the number, the easier it was to get a mortgage. We can see that from June 2005 to June 2007, mortgage standards were much more lenient than they have been over the last nine years.

Bottom Line

Today’s price increases, unlike those a decade ago, are the result of qualified buyer demand exceeding the current inventory of homes available for sale. Once the supply increases, prices will level out.

Comments
Listings
Categories
Recent Posts
Archive
Contact Info
Contact Info
BrokersRealty.Com

6 Offices to Serve You

PA License RB-0631826-C
Lewisberry  Pennsylvania 17339

Office and Fax 888-774-8488

Translator
Social Media

© 2016 Central Penn Multi-List®. All rights reserved.

Information Deemed Reliable, but Not Guaranteed. The property information being provided is for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. The data relating to real estate for sale on this web site comes in part from the participating Brokers.

Last updated on Dec 10, 2016.

© 2016 Greater Wilkes Barre MLS®. All rights reserved.

Information Deemed Reliable, but Not Guaranteed. The property information being provided is for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. The data relating to real estate for sale on this web site comes in part from the participating Brokers.

Last updated on Dec 10, 2016.

© 2016 Keystone MLS Network®. All rights reserved.

Information Deemed Reliable, but Not Guaranteed. The property information being provided is for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. The data relating to real estate for sale on this web site comes in part from the participating Brokers.

Last updated on Dec 10, 2016.

The data relating to real estate for sale on this web site includes listings held by MLS-IDX Participants of the Internet Data Exchange program of the Multiple Listing Service of the Pocono Mountains Association of Realtors®.

Listings marked with the Internet Data Exchange logo are not necessarily the listings of the owner of this web site. All listing data is the copyrighted property of the aforesaid Association and its MLS-IDX Participants with all rights reserved. The information contained herein is believed to be accurate, but no warranty as such is expressed or implied.

Last updated on Dec 10, 2016.

websitebox