Home prices are starting to soften, leaving people concerned that we are heading towards the next housing crash. However, we do have to remember that today’s market is very different than the bubble market 12 years ago.

Here are three main reasons why:

  1. Home Prices
  2. Mortgage Standards
  3. Foreclosure Rates

Almost 10 years ago, home prices started spiraling dramatically. Homeowners lost about 30% of their value over a four year period. Compared to today, just the level of appreciate is spiraling while prices are staying consistent. asked 100 experts what they thought about home values rising

Values aren’t appreciating at rates of 6-7% every year anymore. Although, they have increased more than 4% over the last year. The Home Price Expectation Survey asked 100 experts what they thought about home values rising, 94 of the 100 stated values will continue to rise, but just at a lower rate.

Many are becoming concerned that lenders are starting to ease standards to a level that helped create the last housing bubble. However, there’s plenty of proof that today’s standards are no where as lenient as the standards were leading up to the housing crash.

The Urban Institute’s Housing Finance Policy Center issues a quarterly index which,

 “…measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

Last month, their January Housing Credit Availability Index revealed:

“Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

35% of all home sales in the last decade were short sales and foreclosures. The Mortgage Bankers’ Association revealed just last week that:

“The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.95 percent…This was the lowest foreclosure inventory rate since the first quarter of 1996.”

After using these three key housing metrics to compare today’s market to that of the last decade, we can see that the two markets are nothing alike. So contact us at New Door Residential today, so we can help you get started on selling or buying a home!

Provided by KCM

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