RISMedia
  • News
  • Premier
  • Publications
  • Events
  • Education
  • Newsmakers
  • Power Broker
No Result
View All Result
  • Agents
  • Brokers
  • Teams
  • Marketing
  • Coaching
  • Technology
  • More
    • Headliners New
    • Luxury
    • Best Practices
    • Consumer
    • National
    • Our Editors
Join Premier
Sign In
RISMedia
  • News
  • Premier
  • Publications
  • Events
  • Education
  • Newsmakers
  • Power Broker
No Result
View All Result
RISMedia
No Result
View All Result

Home Prices Rapidly Rise: Is History Repeating Itself?

Home House Canary
By Suzanne De Vita
November 16, 2017
Reading Time: 2 mins read
Home Prices Rapidly Rise: Is History Repeating Itself?

High quality 3d render of miniature houses on a blue graph paper. Housing market concept. Miniature houses are lit by the upper left corner of composition. A red arrow in the composition is symbolizing a sharp increase in sales. Vertical composition with copy space. Great use for real estate and morgage related concepts.

‘Rapid Price Increases Will Not Last Forever’

The current growth in home prices is echoing the lead-up to the recession. Is history repeating itself?

The answer is likely not, according to a recently released realtor.com® report. Building is lacking in many markets—one hallmark 10 years ago was over-construction—and credit standards are more stringent, says Danielle Hale, chief economist of realtor.com.

“As we compare today’s market dynamics to those of a decade ago, it’s important to remember rising prices didn’t cause the housing crash,” Hale says. “It was rising prices stoked by subprime and low documentation mortgages, as well as people looking for short-term gains—versus today’s truer market vitality—that created the environment for the crash.”

In 2016, home prices (the national median home sales price) were 2 percent higher than they were in 2006, the report reveals. Pre-recession prices have returned in 31 of the 50 largest metropolitan areas.

In contrast with 2006, however, are today’s credit conditions. Currently, the median FICO score for a mortgage is 734; the median in 2006 was 700.

Builds and flips are also different from 2006—starkly. The credit environment, among other factors, is keeping a lid on unfettered flipping and over-construction. In 2006, one household formation generally equaled 1.4 single-family housing starts; in 2016, that number shrank to 0.7 single-family starts. Flips accounted for 5 percent of sales in 2016; in 2006, they comprised 8.6 percent.

“Lending standards are critical to the health of the market,” says Hale. “Unlike today, the boom’s under-regulated lending environment allowed borrowing beyond repayable amounts and atypical mortgage products, which pushed up home prices without the backing of income and equity.”

Additionally, economic indicators point elsewhere. Employment was healthy then and is now, but inventory is limited more today—at a 20-year low. Presently, the average months supply is 4.2; in 2007, the average months supply was 6.4.

“The healthy economy is creating more jobs and households, but not giving these people enough places to live,” Hale says. “Rapid price increases will not last forever. We expect a gradual tapering as buyers are priced out of the market—not a market correction, but an easing of demand and price growth as renting or adding roommates becomes a more affordable alternative.”

For more information, please visit www.realtor.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.

For the latest real estate news and trends, bookmark RISMedia.com.

Tags: Credit StandardsHome PricesHome ValuesHousing InventoryHousing SupplyLending StandardsReal Estate Bubblereal estate newsrealtor.com®Recession
ShareTweetShare

Suzanne De Vita

Related Posts

Will Open Houses Become Obsolete?
Agents

Will Open Houses Become Obsolete?

May 26, 2022
Downward Trend in Pending Home Sales Persists in April Under Mortgage Rate Surge
Agents

Downward Trend in Pending Home Sales Persists in April Under Mortgage Rate Surge

May 26, 2022
Mortgage Rates Continue to Decrease
Agents

Mortgage Rates Continue to Decrease

May 26, 2022
Majority of Homeowners Would Rather Make Home Improvements Than Sell
Agents

Majority of Homeowners Would Rather Make Home Improvements Than Sell

May 26, 2022
52% of Home Renovations Take Longer Than Planned
Agents

52% of Home Renovations Take Longer Than Planned

May 26, 2022
Becoming the Broker of Choice
Agents

Becoming the Broker of Choice

May 26, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Tip of the Day

Why You Need a Real Estate CRM

Discover how a real estate client relationship management tool can get you organized and maximize your lead generation, so you... Learn more.

Business Tip of the Day provided by
REGISTER NOW

Recent Posts

  • Will Open Houses Become Obsolete?
  • Downward Trend in Pending Home Sales Persists in April Under Mortgage Rate Surge
  • Mortgage Rates Continue to Decrease

Categories

  • Spotlights
  • Best Practices
  • Advice
  • Marketing
  • Technology
  • Social Media

The Most Important Real Estate News & Events

Click below to receive the latest real estate news and events directly to your inbox.

Sign Up
By signing up, you agree to our TOS and Privacy Policy.

About Blog Our Products Our Team Contact Advertise/Sponsor Media Kit Email Whitelist Terms & Policies

© 2022 RISMedia. All Rights Reserved. Design by Real Estate Webmasters.

No Result
View All Result
  • Home
  • Premier
  • News
    • Agents
    • Brokers
    • Teams
    • Consumer
    • Marketing
    • Coaching
    • Technology
    • Headliners New
    • Luxury
    • Best Practices
    • National
    • Our Editors
  • Publications
    • Real Estate Magazine
    • Past Issues
    • Custom Covers
  • Events
    • Upcoming Events
    • Podcasts
    • Event Coverage
  • Education
    • Get Licensed
    • REALTOR® Courses
    • Continuing Education
    • Luxury Designation
    • Real Estate Tools
  • Newsmakers
    • 2022 Newsmakers
    • 2021 Newsmakers
    • 2020 Newsmakers
    • 2019 Newsmakers
  • Power Broker
    • 2022 Power Broker
    • 2021 Power Broker
    • 2020 Power Broker
    • 2019 Power Broker
  • Join Premier
  • Sign In

© 2022 RISMedia. All Rights Reserved. Design by Real Estate Webmasters.