2014 Housing Bubble Burst - LoanLove.com Takes A Look At The Predictions

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Loan Love's new article reveals the evidence behind an impending real estate bubble burst in 2014.

LoanLove.com is a borrower advice website that is dedicated to helping home buyers and owners to find loans that they will love. The website offers insight into current news that can affect loan options and a borrower's home loan experience and provides resources and advice that both first time home buyers and experienced home owners can take advantage of. A recently featured article continues to provide information that can help buyers to stay on top of the current changes in the mortgage world by looking at the possibility of a 2014 housing bubble burst.

This new guide from Loan Love titled "Housing Bubble Burst In 2014? (The Possibility Is Very Real)" explains that while many headlines may give home owners and buyers an optimistic perception about the housing market recovery, there are some experts that do not believe a true recovery is under way. The article states, "In most cases, those predicting another bubble is on the horizon believe the current housing market recovery, stretching back about 18 months or so, is not a true sign of the sector’s economic outlook at all. Instead, these economists believe a so-called recovery of the housing market is being built on a false foundation."

One factor that is contributing to these predictions is housing affordability. Loan Love says, "Year-over-year price increases could signal another housing bubble, warn some economists. Home prices jumped upward in 119 out of 164 major metro areas the final quarter of 2013, according to the National Association of Realtors. Rising home prices may seem to be the sign of a recovering and prosperous market, but there is a small group of economic analysts pointing to the current situation as even stronger evidence that a housing bubble is about to burst, particularly since interest rates are supposed to rise considerably higher throughout 2015. The same scenario with rising interest rates occurred throughout the years leading up to the last big burst in 2008."

The problem that many economist are pointing at as a sign of a real estate bubble burst in the near future is that fact that many new buyers are being priced out of the market. First time home buyers are seen as an essential element when it comes to sustaining a strong real estate market, as they provide a pool of buyers for those who wish to sell their homes and move into higher valued homes. Without this influx of new buyers, those who currently own homes will have a hard time finding buyers for their homes. A lack of improvement in the unemployment rate, lagging new construction starts, and new investors who are willing to pay more than the listed price for rental homes are also seen as evidence of an inevitable housing bubble burst by these economists.

The article further explains, "Further adding fuel to the flame, according to these analysts, is an industry dealing with stricter loan requirements. That reality has simply sent more prospective home owners toward FHA loans or even loans from non-banks, routes that typically require smaller down payments. Historically, those home buyers putting less cash into the deal have a higher percentage of defaults. While these analysts are not predicting as severe a bubble burst for the housing market as was seen a few short years ago, they do see a false sense of security over a recovery they say simply hasn’t occurred. If housing prices are allowed to continue to rise at rates well above the pace of inflation and rise in rental rates, they warn, the severity of the potential housing market bubble could reach crisis level."

To find out more about this subject, click here to read the full article at LoanLove.com.

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Kevin Blue
Loan Love
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