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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4442 W Hannah Street San Tan Valley, AZ 85144

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$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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2101 W Shelly Avenue Apache Junction, AZ 85120

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4 Beds

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2,051 SqFt

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MLS # 6688460

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Welcome to Radiance at Superstition Vistas, a brand new master planned 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! The Hanna 2052 sq ft, 4 bed/2.5 bath adorable, energy efficient home in which you will find tile in all common areas, 9 foot ceilings and on trend extra bright white walls.. Located close to the 24, 60 & 202.

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16035 W El Cortez Place Surprise, AZ 85387

$459,990

4 Beds

2 Baths

2,139 SqFt

Status Active

MLS # 6557712

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Brand new, energy-efficient home available NOW! This single-story features a split floorplan with the primary suite tucked away in the back of the home. White cabinets with ice quartz countertop and backsplash. Grey tile flooring in our Balanced package. Paloma Creek - Reserve Series is coming soon to Surprise. Strategically located near Loop 303, this family friendly community offers easy access to the amenities of metro Phoenix and includes an exclusive community center on your doorstep. Each energy-efficient home comes standard with features that allow your whole family to live better and breathe easier too.* 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 mind.

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22854 N 126th Lane Sun City West, AZ 85375

$459,990

4 Beds

2 Baths

1,832 SqFt

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MLS # 6671311

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Brand new, energy-efficient home available by May 2024! The expansive great room of the Mason is perfect for watching the big game with friends. Espresso cabinets with white/grey granite countertops, wood-look tile flooring with multi-tone carpet in our Elemental package. Last chance to own at Camino Crossing in Sun City West. With convenient access to the Loop 303, this community provides easy access to schools, major employers, shopping, dining and entertainment. Your family will love spending time at the community park complete with a playground, corn hole and ramadas. We also build each home with innovative, energy-efficient features that cut down on utility bills so you can afford to do more living.*

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