No Housing Bubble Here Part XXII; 12 Million More Households Than In 2007!


    Housing appreciated 16.6% from May of 2020 to May of 2021. This is a record and it is again sparking media concerns that we are in a housing bubble.

    So, I am hitting the issue again to allay concerns, and I am again relying on our friend Barry Habib, founder of MBS Highway.

    He sends the mortgage world very informative videos every day.


    Habib recently encouraged everyone to ignore the constant doom and gloom predictions of CNBC’s Diana Olick, illuminating the numerous times she has been flat wrong.

    His broader point was to ignore the doom and gloom predictions of pundits in general, as they tend to endlessly promote negative predictions for ratings purposes, and they are never held accountable for being wrong over, and over, and over…


    Habib hit the current demographics and inventory numbers again, and they are very telling!

    1. Purchase Applications Down By 18% Year Over Year; But What About Cash Buyers? Purchase application numbers are scaring analysts into thinking “the end may be near.” But, Habib again reminds us that purchase application data does not account for cash purchases which are up by 50% year over year and account for 24% of purchases overall.
    2. 3.7 Million Homes For Sale In 2007; 1.2 Million Homes Today. This is the most telling statistic of all. In 2007, just prior to the meltdown, there were 3.7 million homes for sale. Today, there are only 1.2 million homes for sale. This supply change alone accounts for much of the appreciation we are seeing.
    3. 12 Million More Households Than In 2007. This is the other very telling data point that could justify the appreciation on its own. In 2007, there were 116 million households in need of a home. Today there are 128 million – or 12 million more!
    4. Far Fewer “Strippers” (aka Speculators) Buying Homes. :) Habib references a scene in “The Big Short” movie (in which a stripper was bragging about owning five homes) to illustrate his point. Prior to 2007, there were literally millions of people buying homes for speculation purposes without having to verify income or put any money down. Today, investors make up 14% of the market, but they are mostly “buy and hold” investors this time with verified income and much larger down payments, so we should not expect an onslaught of sales or foreclosures like we saw after 2007.
    5. Real Estate Is Not Like Stocks. When people sell stocks, they do not have to buy more stocks with their proceeds. BUT, when people sell real estate, they often do have to buy a new home to live in. Habib made this point to illustrate that the real estate market is vastly different from the stock market and that pundits are wrong to expect the real estate market to adjust as quickly or as volatilely as the stock market.

    Anyway, I have now blogged about “bubble concerns” at least 15 times over the last 18 months. And, I will continue to do so as long as conditions remain the same and pundits continue to panic over appreciation numbers.

    Jay Voorhees
    Founder/Broker | JVM Lending
    (855) 855-4491 | DRE# 1197176, NMLS# 310167

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