Bubble Ready To Burst Again Its Not Gonna Happen

Dated: 10/15/2015

Views: 1045

Here's why:

According to the National Association of Realtors, home prices have just now reached the 2006 levels.  The price increases we saw this year were the result of what we were taught in Econ 101: Housing inventory or supply is low and demand is high.  It naturally leads to price increases until we reach equilibrium which will mean when the supply increases.  How does the supply increase? By more sellers selling and not repurchasing.  Normally, supply increased because builders were able to borrow money and build fast enough to create this equilibrium. However, until the local Banks go back to loaning money to local builders to again build out plats, builders are not adding enough inventory to meet the buyer demand.  Hopefully, Congress will make this possible by lifting restrictions to lending at the local level.  

10 years ago, the housing bubble was fueled by free and easy credit. Today, especially since the October 3 CFPB changes, most of those credit work arounds are impossible and we should be back to a market where loan delinquencies are at a tolerable level. 

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