3 Reasons the Housing Market is NOT in a Bubble

With housing prices appreciating at levels that far exceed historical norms, some are fearful that the market is heading for another bubble. To alleviate that fear, we just need to look back at the reasons that caused the bubble ten years ago.

Last decade, demand for housing was artificially propped up because mortgage lending standards were way too lenient. People that were not qualified to purchase were able to attain a mortgage anyway. Prices began to skyrocket. This increase in demand caused homebuilders in many markets to overbuild.

Eventually, the excess in new construction and the flooding of the market with distressed properties (foreclosures & short sales), caused by the lack of appropriate lending standards, led to the housing crash.

Where we are today…

1. If we look at lending standards based on the Mortgage Credit Availability Index released monthly by the Mortgage Bankers Association, we can see that, though standards have become more reasonable over the last few years, they are nowhere near where they were in the early 2000s.

2. If we look at new construction, we can see that builders are not “over building.” Average annual housing starts in the first quarter of this year were not just below numbers recorded in 2002-2006, they are below starts going all the way back to 1980.

3. If we look at home prices, most homes haven’t even returned to prices seen a decade ago. Trulia just released a report that explained:

“When it comes to the value of individual homes, the U.S. housing market has yet to recover. In fact, just 34.2% of homes nationally have seen their value surpass their pre-recession peak.”

Bottom Line

Mortgage lending standards are appropriate, new construction is below what is necessary and home prices haven’t even recovered. It appears fears of a housing bubble are over-exaggerated.  Give me a call to discuss the current market and how it affects you – J.P. Cook – 602-320-4253.

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2811 N 195th Drive Buckeye, AZ 85396

$459,995

4 Beds

3 Baths

2,070 SqFt

Status Active

MLS # 6653887

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Explore this impressive Slate home, ready for quick move-in on a homesite boasting driveway pavers and front yard landscaping. Included features: an inviting covered entry; an open dining area; a well-appointed kitchen offering 42'' cabinets, quartz countertops, stainless-steel appliances, a roomy pantry and a center island; a spacious great room; a lavish primary suite showcasing a generous walk-in closet and a private bath with cultured marble countertops; a central laundry; a convenient storage area; a covered patio and a 2-car garage. This home also offers stone tile flooring, ceiling fan prewiring and additional windows in select rooms.

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2815 W Spaulding Avenue Apache Junction, AZ 85120

$459,990

4 Beds

2 Baths

1,757 SqFt

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MLS # 6671267

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Radiance at Superstition Vistas, a brand new community located on the border where Mesa meets Apache Junction. This is a rare opportunity for optimal living - to have the convenience of City living while enjoying the breathtaking Superstition mountains! Small town feel meets modern amenities at its best! Under construction now are the amazing amenities that include a resort-like pool area, 11,000 sq ft clubhouse w/fitness center, splash pad & park! walking trails and parks throughout the community as well! 1757 sq ft, 4 bed/2 bath adorable, energy efficient single level home with a HUGE YARD in which you will find 12X24 tile in all common areas, 9 foot ceilings & on trend extra bright white walls. The kitchen has gorgeous maple cabinets, granite countertops & large island

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4469 W Josephine Street San Tan Valley, AZ 85144

New

$459,990

4 Beds

3 Baths

2,342 SqFt

Status Active

MLS # 6692761

Property Type Single Family Residence

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Brand new, energy-efficient home available by Apr 2024! A unique single-story home featuring a social living area. Umber cabinets with white granite countertops and backsplash. Grey tile flooring in our Cool package. Enjoy secluded primary suites at San Tan Groves in San Tan Valley. San Tan Groves is conveniently located minutes from San Tan Mountain Regional Park, making morning hikes easy! This community boasts ample storage and a 5 bedroom layout. Enjoy dining and entertainment just a few miles away. We build each home with innovative, energy-efficient features that cut down on utility bills so you can afford to do more living.* Each of our homes is built with innovative, energy-efficient features designed to help you enjoy more savings, better health, real comfort and peace of mi

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4442 W Hannah Street San Tan Valley, AZ 85144

New

$459,990

4 Beds

3 Baths

2,342 SqFt

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MLS # 6692712

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Brand new, energy-efficient home available NOW! A unique single-story home featuring a social living area. Umber cabinets with hardware, dusty white granite countertops, stone-look tile flooring and warm beige carpet in our Calm package. Enjoy secluded primary suites at San Tan Groves in San Tan Valley. San Tan Groves is conveniently located minutes from San Tan Mountain Regional Park, making morning hikes easy! This community boasts ample storage and a 5 bedroom layout. Enjoy dining and entertainment just a few miles away. We build each home with innovative, energy-efficient features that cut down on utility bills so you can afford to do more living.* Each of our homes is built with innovative, energy-efficient features designed to help you enjoy more savings, better health,

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