We’re going to review if Metro Detroit MI if we are in a Real Estate Housing Bubble let alone ready to pop. So let’s review the Housing Market Predictions 2022 graph and trends. For in-depth understanding watch the video. I have important information in the video that’s not in the post below.
Start with the video ☝☝☝
Before you can review the graphs below, watch the video as it will provide the back story of what led up to the last crash and why this time is different. The blog post was written to use as a reference point and view the graphs in detail for a better understanding after you watch the video.
Let me start off with, what you see on the news or in media headlines doesn’t represent the Metro Detroit market. So, I’ve laid out a detailed graph to prove my point why this time is nothing like last time. If you do your research and understand the housing market you’ll make great decisions based on facts and protect your investment at the same time. I’ve given you the tools on this website to do just that. Take some time and work through the complete blog post and watch the videos. This should be your 1st stop on your journey, phase 2 is actually looking for a house. Yes, we’re talking the boring numbers, and yet it still represents YOUR MONEY.
Ways to Keep Up to Date
1. Check back to my website and social media to keep up to date ~ you can find me by searching TeamTagItSold
2. Request my newsletter ~ 🏡 Chat! News you can use
3. Follow the Housing Market Price ~ Trends ~ and mortgage Rates by visiting Metro Detroit Housing Market Prices and Trends
4. Read my blog post in Simplifying Real Estate ~ Far right side pick your categories so you become an expert 👍
The Economic Slowdown
With so much talk about an economic slowdown, some people are asking if the housing market is heading for a crash like the one in 2008. To really understand what’s happening with real estate today, it’s important to lean on the experts for reliable information.
Here’s why economists and industry experts say the housing market is not a bubble ready to pop.
1. Mortgage Rates Then and Now
During the last housing boom in 2000, the mortgage rates peaked at 8.7%. Home value still increased and homes were still being sold. If you look at the graph, Mortgage Rates didn’t drop below 5% until 2011 and rose again in 2018 to 4.90%. Mortgage rates didn’t drop below 4% until May 30th, 2019. March 2020 was the first time rates hit 3.5% and we’ve experienced a 50-year low in mortgage rates due to the pandemic. The Feds were buying up 10-year bonds like crazy and that caused the rates to dip to their lowest in February 2021. The Feds started to slow down their bond-buying and the mortgage rates started to go up to the 3% range in March of 2021. The 10-Year Treasury Yield is going down and Mortgage Rates are following.
Feds Shifted from Pandemic Mode to Inflations
In December the Feds announced they were shifting from Pandemic mode and now will start addressing inflation. The Feds stopped propping up 10-year Treasury Bonds and offering a lower bond rate, so investors are staying out of the market until there is a rate increase. Shortly after per the graph above, the great U.S. Treasury Yield acceleration started and Mortgage Rates followed. To track where mortgage rates are going you follow the 10-year treasury yield. The good news is since April 8th the 10-year Treasury Bond percentage increased has slowed down and we’re down bouncing back a forth by a smidge. When you hear the Federal reserve getting aggressive about raising INTEREST Rates, don’t panic. This is the rate at which commercial banks borrow and lend their excess reserves for loans like cars and credit cards. Mortgage Rates are NOT determined by the Federal Reserve Interest Rates. Mortgage Rates for August is now under 5% depending on your FICA Score and down payment.
Step #1 ~ Do You Homework to find the Best Lender and Program for You
💥 Important 💥 We’ve seen many changes lately with high mortgage rates and now lenders are designing special programs to help you and compete for your business… Great News!
✅ Do ~ Call around and check out and get quotes for rates and what type of programs different lenders have available. Give the lenders your FICA score to get quotes.
✅ Do ~Call around and check out and get quotes for rates and what type of programs different lenders have available. Give the lenders your FICA score to get quotes.
🛑 DON’T ~give out your Social Security Number as they will pull your credit. Wait until you select a lender and a program that works best for you then make an application. You are getting rough quotes for now based on the FICA score you obtained, it doesn’t have to be exact for now. You’re in the weeding-out phase of your search.
✅ DO ~ contact me with any question you may have via my cell at 248-343-2459
🙋♀️~ Not sure where to start? Get Your Do’s and Don’ts during the loan process. Below are lenders I’ve worked with in the past that offer amazing programs and options. You can also check with your Bank or Credit Union (Alpha order: not based on preference.)
First State Bank – Manny Nino – Loan Officer 📲 Cell: 586-945-5203
Flagstar Bank – Ray Cela – Loan Officer/VP Sale 📲 Cell: 248-238-1849
Keller Mortgage – MaryAnn O’Brian – Loan Officer 📲 Cell: 843-368-7163
Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices.
Today, things are different, and purchasers face much higher standards from mortgage companies. Mark Fleming, Chief Economist at First American, says:
“Credit standards tightened in recent months due to increasing economic uncertainty and monetary policy tightening.”
Stricter standards, like there are today, help prevent a risk of a rash of foreclosures like there was last time.
Mortgage Standards Were Much More Relaxed During the Crash
During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. The graph below showcases data on the Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers Association (MBA). The higher the number, the easier it is to get a mortgage.
3. Today, Demand for Homeownership Is Real (Not Artificially Generated)
Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. Today, purchasers and those refinancing a home face much higher standards from mortgage companies.
Data from the Urban Institute shows the number of risks banks were willing to take on then as compared to now.
There’s always a risk when a bank loans money. However, leading up to the housing crash 15 years ago, lending institutions took on much greater risks in both the person and the mortgage product offered. That led to mass defaults, foreclosures, and falling prices.
Today, the demand for homeownership is real. It’s generated by a re-evaluation of the importance of home due to a worldwide pandemic. Additionally, lending standards are much stricter in the current lending environment. Purchasers can afford the mortgage they’re taking on, so there’s little concern about possible defaults.
The 2 Main Reasons for the Crash 15 Years Ago were driven by Job loss and Lending Practices
Back in 2006, foreclosures flooded the market. That drove down home values dramatically. The two main reasons for the flood of foreclosures were:
1. Many purchasers were not truly qualified for the mortgage they obtained, which led to more homes turning into foreclosures.
The Foreclosure Volume Is Nothing Like It Was During the Crash
The most obvious difference is the number of homeowners that were facing foreclosure after the housing bubble burst. Foreclosure activity has been on the way down since the crash because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM Data Solutions to help tell the story:
Homeowners today are equity rich, not tapped out. In the run-up to https://www.metrodetroithomeexperts.com/category/housing-market/home-equity/he housing bubble, some homeowners were using their homes as personal ATMs. Many immediately withdrew their equity once it built up. When home values began to fall, some homeowners found themselves in a negative equity situation where the amount they owed on their mortgage was greater than the value of their home. Some of those households decided to walk away from their homes, and that led to a wave of distressed property listings (foreclosures and short sales), which sold at considerable discounts that lowered the value of other homes in the area.
Today, prices have risen nicely over the last few years, and that’s given homeowners an equity boost. According to Black Knight:
“In total, mortgage holders gained $2.8 trillion in tappable equity over the past 12 months – a 34% increase that equates to more than $207,000 in equity available per borrower. . . .”
With the average home equity now standing at $207,000, homeowners are in a completely different position this time.
4. Home Appreciation Then and Now
Homeownership has become a major element in achieving the American Dream. A recent report from the National Association of Realtors (NAR) finds that over 86% of buyers agree homeownership is still the American Dream.
Prior to the 1950s, less than half of the country owned their own home. However, after World War II, many returning veterans used the benefits afforded by the GI Bill to purchase a home. Since then, the percentage of homeowners throughout the country has increased to the current rate of 65.5%. That strong desire for homeownership has kept home values appreciating ever since. The graph below tracks home price appreciation since the end of World War II:
The graph shows the only time home values dropped significantly was during the housing boom and bust of 2006-2008. If you look at how prices spiked prior to 2006, it looks a bit like the current spike in prices over the past two years. That may lead some people to be concerned we’re about to see a similar fall in home values as we did when the bubble burst. To help alleviate those worries, let’s look at what happened last time and what’s happening today.
5. Houses Are Not Unaffordable Like They Were During the Housing Boom
The affordability formula has three components: the price of the home, wages earned by the purchaser, and the mortgage rate available at the time. Conventional lending standards say a purchaser should not spend more than 28% of their gross income on their mortgage payment.
Fifteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased, and the mortgage rate, even after the recent spike, is still well below 6%. That means the average purchaser today pays less of their monthly income toward their mortgage payment than they did back then.
In the latest Affordability Report by ATTOM Data, Chief Product Officer Todd Teta addresses that exact point:
“The average wage earner can still afford the typical home across the U.S., but the financial comfort zone continues shrinking as home prices keep soaring and mortgage rates tick upward.”
Affordability isn’t as strong as it was last year, but it’s much better than it was during the boom. Here’s a chart showing that difference:
If costs were so prohibitive, how did so many homes sell during the housing boom?
6. People Are Not Using Their Homes as ATMs Like They Did in the Early 2000s
Why are there so few foreclosures now? Today, homeowners are equity rich, not tapped out. In the run-up to the housing bubble, some homeowners were using their homes as personal ATM machines. Many immediately withdrew their equity once it built up. When home values began to fall, some homeowners found themselves in a negative equity situation where the amount they owed on their mortgage was greater than the value of their home. Some of those households decided to walk away from their homes, and that led to a rash of distressed property listings (foreclosures and short sales), which sold at huge discounts, thus lowering the value of other homes in the area.
Homeowners, however, have learned their lessons.
Prices have risen nicely over the last few years, leading to over 40% of homes in the country having more than 50% equity. But owners have not been tapping into it like the last time, as evidenced by the fact that national tappable equity has increased to a record $9.9 trillion. With the average home equity now standing at $300,000, what happened last time won’t happen today.
As the latest Homeowner Equity Insights report from CoreLogic explains:
“Not only have equity gains helped homeowners more seamlessly transition out of forbearance and avoid a distressed sale, but they’ve also enabled many to continue building their wealth.”
There will be nowhere near the same number of foreclosures as we saw during the crash. So, what does that mean for the housing market?
7. We Don’t Have a Surplus of Homes on the Market – We Have a Shortage
The supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation.
For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to tumble. Today, supply is growing, but there’s still a shortage of inventory available.
The graph below uses data from the National Association of Realtors (NAR) to show how this time compares to the crash. Today, unsold inventory sits at just a 3.0-months’ supply at the current sales pace.
One of the reasons inventory is still low is because of sustained underbuilding. When you couple that with ongoing buyer demand as millennials age into their peak homebuying years, it continues to put upward pressure on home prices. That limited supply compared to buyer demand is why experts forecast home prices won’t fall this time. Inventory is nothing like the last time. Prices are rising because there’s a healthy demand for homeownership at the same time there’s a shortage of homes for sale.
Get Your Updates on Home Prices by City and Price Range and Home Inventory Levels 👇👇👇
If your think you’ll be buying a home and will lose money because home prices will go down…think again.
All indications home value will continue to go up BUT at a normal pace, not this insanity we’ve seen over the past 2 years. You want to buy a home when the home prices are more in line with a normal housing market, not this hot competitive mess we’ve seen in the past 2 years. History has shown us mortgage rates will always go down and you can always refinance, home prices won’t. If you holding back because you’re afraid the value of your new home will go down and you’ll lose money, based on the housing inventory levels still in the negative range….home prices will still go up.
Step #1 ~ Mortgage Rates are Dropping
We look at what caused the Mortgage Rates to Skyrocket, and how you track where they are going. Also, know the difference between the Federal Reserve and Interest rates vs Mortgage Rates and the correlation with the 10-year treasury yield. For updates review Mortgage Rates ~ Monday Updates to review the full blog post and all graphs and trends on my website. Updated Videos will be posted on social media at #TeamTagItSold.
Step #2 ~ Your 🔑 To Home Selling and Buying Success ~ Safe e-Guides
💥 Important 💥 Your Guides also have educational videos and links regarding where home prices are heading, mortgage rates, Housing Market Trends, and more.
Watch Video for Sneak Peak
Don’t muddle through the Home Buying and Selling Process. Buying a new home is a dream for all of us, and it’s an emotional and stressful process.
It also involves the most significant financial transaction you probably will make in your lifetime. Your Buying Guide…will walk you through tips, strategies, and how to understand the numbers to strengthen your negotiation power.
Your Selling Guide…It will help you work through the selling process using the latest in high-tech market tools, so you make MORE Money. Our goal is to separate your home from the competition, and keep Buyers focused on your house. The Selling Guide is very detailed and works step-by-step, so you’re guaranteed Top Dollar for your home.
Step #3 ~ 💥Search Better Than a Realtor💥 on a Platform that was Designed by One.
Find Your Ideal Home Here ~ Pre-loaded Home Search: Newly Listed ~ Coming Soon ~Luxury~ Waterfront ~ and More🤩
Create an account and save your favorites and email updates. Another huge feature you can modify and look for homes Coming Soon only, or view homes that have been on the market X number of days. Maybe a 1st floor primary bedroom or office is important. You can even search by lot features like Finished Basement ~ Golf Frontage ~ Water Frontage ~ Acreage ~ Large private treed lot ~ Cul-de-Sac and More.
Bottom Line Housing Market Predictions 2022: Are we in a Housing Bubble Ready to Pop? ~ I just don’t see it and here’s why.
I’ve been in business for 22 years and I’ve seen the strangest market shifts over the years. As you can tell, yes I’m a numbers geek all day long. I always start with the money. Here is the great news! We are just coming out of the worse medical emergency we’ve seen in a hundred years. The government propped up the economy and provided a safety net. The major reason for the housing crash 15 years ago was a tsunami of foreclosures. With much stricter mortgage standards and a historic level of homeowner equity, the fear of massive foreclosures impacting today’s market is not realistic. All this means we are moving to a more normal market and if you look at the mortgage trends adjustment and moving to another. As you can see by the Freddie Mac Trends from 2000 we are just moving to a normal Mortgage market…FINALLY! If you’re worried that we’re making the same mistakes that led to the housing crash, the graphs above show data and insights to help alleviate your concerns. Call me and let’s discuss your concerns and questions.
Simplifying Real Estate Through Education
As we move forward, it’s been challenging as we navigated through all the changes. Putting your dream of a new home on HOLD shouldn’t be one of them. Now more than ever, knowledge will be your power. Know the Market You’re In and your Negotiation Power. Check out Categories for additional updates regarding the Market | Buying | Selling
If You Need To Sell 1st… I Recommend 🛑Doing This!
No 2 homes are alike, and agents need to 🛑 marketing ONE size fits all. We no longer have an exposure problem (internet). Your home is buried on public home search internet sites. The only way to compete on those platforms is the price. If you want more money, you need to apply Influence. Separate your home from the competition, so the Buyer sees value. Keeping them focused on your property and not getting lost in homes’ inaccurate data on public internet sites is necessary. Having digital omnipresence on serval platforms is your key to success. Remember MORE INFLUENCE = MORE 💰. We have details on how you can utilize High Tech Marketing and Win!
If you have any questions, contact us: Chatbot 🤖 at the bottom. Contact me by Email 📩 or my Cell 📲 @ 248-343-2459. Would you mind sharing your thoughts below or what future article you would like to see? Your opinion is important to us…. this site is for you.🤩 To Keep up to date request our 🏡 Chat Newsletter or Follow us on Facebook, Instagram, or YouTube.
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