Three Key Indicators Of A Healthy Real Estate Market

Real Estate Broker/Owner with Rummy Dhanoa Real Estate Experts

With the traumatic devastation caused by the last housing bubble, it's understandable why a lot of Americans can be a little paranoid when it comes to market fluctuations. We tend to worry about heading into another housing crash whenever we see changes in the market. Good news is, we no longer have to go through all that unnecessary stress for here are three indicators to let us know how the market then and now are different from each other.

  1. Home Prices
  2. Mortgage Standards
  3. Foreclosure Rates

A decade ago, home prices depreciated dramatically, losing about 29% of their value over a four-year period (2008-2011).

Today, prices are not depreciating. The level of appreciation is just decelerating. Home values are no longer appreciating annually at a rate of 6-7%. However, they have still increased by more than 4% over the last year. Of the 100 experts reached for the latest Home Price Expectation Survey, 94 said home values would continue to appreciate through 2019. It will just occur at a lower rate.

Many are concerned that lending institutions are again easing standards to a level that helped create the last housing bubble. However, there is proof that today's standards are nowhere near as lenient as they were leading up to the crash. The Urban Institute's Housing Finance Policy Center issues a quarterly index which,

"...measures the percentage of home purchase loans that are likely to default-that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan."

Last month, their January Housing Credit Availability Index revealed:

"Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market."

Within the last decade, distressed properties (foreclosures and short sales) made up 35% of all home sales. The Mortgage Bankers' Association revealed just last week that:

"The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.95 percent...This was the lowest foreclosure inventory rate since the first quarter of 1996."

After using these three key housing metrics to compare today's market to that of the last decade, we can see that the two markets are nothing alike.

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Rummy Dhanoa - Broker with New York Real Estate Experts


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William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

Jobs, good employment and Home availability these top my list for a good market

Mar 05, 2019 05:28 PM #1
Leif Price
Chirpy Home - Portland, OR
Blogger at Chirpy Home

For me, a good market equates to good employment(and employee) rates and decent homes that are for sale or rent. You can't only have one, these should go together. Bad rates means cannot pay for rent or house.

Mar 05, 2019 05:52 PM #2
Sally Crane
WMS - Unity, WI
Woodland appraisal support.

Thanks for the update, all the best to you as you get many of these properties listed and sold.

Mar 06, 2019 06:21 AM #3
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