Market Review Says Home Prices Are Still Rising

Dated: 03/14/2016

Views: 230

Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming | Keeping Current Matters

We recently reported that home prices are continuing to rise across most of the nation. This has created concern in some pundits that a housing bubble, like we saw ten years ago, is forming again. We want to explain why these concerns are unfounded.


The current increase in home values can be easily explained by the theory of supply and demand. Right now, the number of families looking to purchase a home is greater than the supply of homes on the market.


Here is a chart that explains how the months’ supply of housing inventory impacts home values:


Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming | Keeping Current Matters


According to the latest Existing Home Sales Report from the National Association of Realtors, there is currently a four-month supply of inventory. That puts us in the blue section of the above graphic. Home prices should be appreciating.


The difference in 2006…


A decade ago, the demand for housing was artificially boosted by lending standards that were far too lenient. Today, the strength of the demand for housing is legitimate, as lending standards are nowhere near what they were a decade ago.


For proof of this, let’s look at a graph of the Mortgage Bankers’ Association’s Mortgage Credit Availability Index:

Yes, Home Prices Are Rising. No, a New Housing Bubble is NOT Forming | Keeping Current Matters


The higher the number, the easier it was to get a mortgage. We can see that from June 2005 to June 2007, mortgage standards were much more lenient than they have been over the last nine years.


Bottom Line


Today’s price increases, unlike those a decade ago, are the result of qualified buyer demand exceeding the current inventory of homes available for sale. Once the supply increases, prices will level out.

Blog author image

Lisa Birdsong

Top 1% of Texas Real Estate Teams; McSam Realtor of the Year, 2016; Certified Residential Specialist, CRS D Best Realtor, 2016, 2017 Castle Hills Realtor Advisory Board, 2016; Windsong Ranch Real....

Latest Blog Posts

How To Buy A Home With Zero Money Down

No down payment? We have a list of homes in Dallas-Fort Worth area that qualify for 100% financing through USDA program. The criteria is specific, but we have lenders to help you determine

Read More

Lease To Own The Home Of Your Choice

The path to home ownership is easier than you think. There are numerous loans available to assist you, but if those don't meet your needs then we have another option for you. And it's affordable.The

Read More

Housing Starts Tumble In July

Homebuilding in the U.S. took a downward turn in July as housing starts declined 4.8 percent, falling short of analyst expectations, the Commerce Department said on Wednesday. Year-over year,

Read More

506 Connemara Celina TX For Sale

POOL HOME ON SPECTACULAR CUL-DE-SAC LOT BACKING TO GREENBELT & CREEK!  See more pictures and information here:  https://goo.gl/ghcf6h Offered exclusively by Lisa Birdsong Group |

Read More