More Housing Bubble Fears in the Media

More Housing Bubble Fears in the Media

Home prices have risen 12% year-over-year nationally since 2006. In Utah alone home values have gone up 28.5% over the past year. This has prompted another round of media fearmongering that a housing bubble is imminent in the upcoming year. The media has been talking about a housing bubble for the past several years, only to see home prices continue to be well supported.

When it comes to these dramatic headlines it can be hard to know what to believe. You want to put your trust in the industry experts. Those of us in the housing industry respect that buying a home is a major life transaction, and we offer advice based on what the current data shows.

So, despite what you may be reading the housing market is still undeniably strong. There are definite signs of demand cooling down. However, buyer traffic is still at historically high levels compared to pre-pandemic levels.

Comparing today’s housing market to the market in 2006 requires us to understand some key differences to help us see the full picture.

Let’s break this down.

The majority of individuals who buy homes do so based upon the monthly payment. Therefore, we must consider differences in mortgage interest rates, as well as differences in household income between the market in 2006 and today.

Mortgage rates in 2006 ran about 3% higher than interest rates that are available today. We’ve seen rates as low as 2.75% (2.893% APR). This helps make the monthly payment today much lower, even in some cases where the amount borrowed is higher.

Meanwhile, average hourly earnings have increased by 55% from 2006 to today, according to the Bureau of Labor Statistics.

Because of the rise in income, as well as the drop-in interest rates, the cost to purchase a home today is significantly more affordable than it was in 2006.

Additionally, today’s appreciation is due to record low home inventory levels and strong demographic demand, which wasn’t the case in 2006.

Don’t let the media scare you out of all the wonderful benefits of homeownership.  Contact me today and let’s get started on finding your dream home for an amazing rate!



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