December 11, 2015—As we near the ten-year anniversary of the 2006-2007 housing bubble
and as housing values continue to rebound in many markets, the question becomes “should Americans be worried that history could repeat itself”? Many housing experts cite several factors supporting a more stable market than the market of a decade ago, including the following:
- Fixed-Rate Mortgages are becoming more common in the market. With historically low interest rates remaining, many home buyers and home owners (through refinancing) have opted for fixed-rate loan products versus the short-term Adjustable Rate Mortgage (ARM). What hurt the market ten years ago was the lure of ARMs, leading to many homeowners experiencing dramatic rate increases when the ARMs reset, resulting in a flood of homeowners who could no longer afford their mortgage payments.
- The economy continues to improve. Over the past five years, a steady stream of new jobs has been added to our economy, replacing many of the jobs lost during the recession (unemployment is now down to 5%), with the quality of jobs improving as the economy continues to improve.
- Low inventories in many markets. While the U.S. population has grown by 14% since 2000, the supply of existing homes for sale in the market is lower than 15 years ago. Additionally, new home starts for single family products is 25% below the average for the past 15 years, and 60% below the peak in 2006.
- Distressed properties are being flushed from the market. While bank repossessions have reached the highest levels in two years, the reason has more to do with banks flushing out old distressed properties rather than seeing an uptick in delinquent mortgages. The number of loans currently in foreclosure is 2.1% nationwide, the lowest level since 2007, according to the Mortgage Banker’s Association.
- First-time buyer programs are helping new buyers enter the market. The availability of down payment assistance programs for first-time buyers are growing. Often times first-time buyers must attend educational classes to qualify for down payment assistance, leading to more educated buyers who have a better understanding of the responsibilities of homeownership.
- FHA reducing costs to finance. Last year the Federal Housing Authority reduced its annual mortgage insurance premium up to $900 per year, estimated to have help jump start home sales by 5.6 million units, the most since 2006. Additionally, the National Association Of Realtors predicts the move could lure 140,000 more buyers into the market.
- Tighter lending standards prevailing. Loose credit standards are no longer fueling a surge in home sales, rather tighter lending requirements have reduced the number of foreclosures nationwide to a ten-year low.
- Interest Rates likely to remain low. While the speculation continues that the Federal Reserve will raise interest rates, no one expects large jumps if the Fed does make a move.
Buyers, it’s still a great time to buy – plenty of homes available in our area coupled with historically low interest rates! If you’ve been thinking of purchasing a home on the Mogollon Rim, we have the experienced agents at Dominion Group Properties to assist you! And Sellers, don’t miss out on this perfect time to capture a buyer while rates remain low. Let us show you how we use top notch marketing to promote our listings, to help you get your property SOLD!
For home buyer or home seller assistance, please contact one of our Dominion Group Properties’ Real Estate Professionals at 928.468.3232 or visit us at our Bison Ranch office in Overgaard. Learn more about us at Dominion Group Properties. We at Dominion Group Properties are your Rim Country Real Estate Professionals!
Sources: 10 Reasons Why Another Imminent Real Estate Crash Is Unlikely; The Street.com; November 10, 2015