Finance

The housing market is not in another bubble

I’ve heard a few grumblings recently regarding another housing bubble and collapse as home prices have appreciated significantly over the last 8 years. While prices have appreciated, the type of home loans are not problematic. As you can see below, the number of subprime first mortgages is paltry compared to 2006-2007.

subprime mortgages.PNG

This is important because the original financial crisis was caused by too many subprime mortgages going bust. Once the money stopped flowing into the MBS, the whole system froze as banks were no longer will to lend to other banks. Long story short, while home prices are appreciating, there is not an impending mortgage crisis on the horizon.

Categories: Finance, Real estate

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