Here are 7 reasons the U.S. is not in a housing bubble. ⠀ 1. Low inventory Not enough houses. In March, inventory was down 28% percent from the prior year. ⠀ 2. Lack of supply coming The U.S. is 3.8 million homes short of demand, and low levels of new home construction over the past three years has increased that shortfall. ⠀ 3. Buyer demographics Nearly 5 million Millennials will be turning 30 this year. Millennials will drive the nation’s real estate market for the next decade. ⠀ 4. International demand As the pandemic recedes, international home purchases will pick up. Global buyers- many paying cash - seek vacation homes, primary residences and investment properties in the U.S. ⠀ 5. Low mortgage rates This spring, the Federal Reserve is supporting housing market by keeping rates low for borrowers – a practice it intends to follow until 2022 at least. ⠀ 6. Tight credit Risky credit practices in the early 2000s were a leading cause of the last housing bubble. At that time, risky loans were 40% of mortgages. Currently, those loans are only 2% of the market. ⠀ 7. Greater equity Rising home prices and greater savings rates have increased equity for millions of U.S. owners. 1 in 3 mortgaged homes is “equity-rich,” with loans owing 50% or less of market value.
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