Here are some facts to show why we are not in a housing bubble.
I’ve been asked a lot lately whether we’re in a bubble. My short answer is no. Here are some facts that’ll show why we’re not in a housing bubble:
The last housing crisis happened due to loose underwriting practices, lax buyer requirements, no down payments, and 100% financing. Most homes were purchased by investors, regardless of the cash flow. In 2006 we had negative leverage, negative cash flow, and no amortization.
In 2021, underwriting and loan practices are much more regulated, and buyers are vetted much more strictly. There’s no more 100% financing, and government policies allow more flexibility for people delinquent on their mortgages. There’s also still a serious housing shortage in California despite any coming foreclosures and migrations, so they won’t affect the market all that much.
If you have any questions about the market or real estate in general, please feel free to reach out to me.
