Are the factors that led to the last market downturn still around?
Today we’ll talk about whether or not we’re in a housing bubble. This is something that I’ve been asked several times this year. As I look back at how things used to be, I don’t think we are. I think that this might simply be the new norm. What got us into the predicament we were in during the financial meltdown? There were some factors back then that don’t exist today.
One of the biggest factors was predatory lending. We had a lot of lenders taking advantage of borrowers. Two other factors were the low credit requirements and that the administration was touting that everybody should own a home. The other biggest factor was the adjustable interest rates and how that made payments unaffordable. In our local market, we had areas that were tax abatements where people weren’t paying property taxes. When you combined adjustable interest rates with property taxes coming due after five years, payments rose significantly.
We’re not seeing these factors in the market today. If you have any questions, please feel free to give us a call at 515-554-5870. We look forward to hearing from you.