Housing Bubble Burst In 2014 – Is It Possible?

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A new article from LoanLove.com takes a look at the possibility of a new housing bubble burst and explains some of the factors contributing to the situation.

With access to first class information, valuable resources and connections to top rated industry professionals LoanLove.com is a trusted destination for current news and expert loan advice. A recently featured article continues to keep homeowners and potential home loan borrowers up to date with information about a potential housing bubble burst in 2014.

This new Loan Love guide titled, Housing Bubble Burst In 2014? (The Possibility Is Very Real), says, “While many in the real estate, home lending and related sectors have celebrated the slow, but steady, progress of the housing market, there remains a segment of economists who are not nearly so optimistic. These experts believe a housing bubble burst in 2014, or soon thereafter, is very likely.”

Loan Love explains, “A bubble in the housing market occurs when home prices rise at a rate well beyond the rate of inflation and the rate of increase in rental rates. 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.”

The article explains that one of the major concerns of some economist is housing affordability. According to the article, home prices jumped upward in 119 or 164 major metropolitan areas in the final quarter of 2013. While rising home prices may seem like a sign of recovery for real estate, a few analysts are pointing to this as a sign that the housing bubble is about to burst again. In addition, interest rates are predicted to rise throughout 2015, leading to the same scenario that resulted in the last real estate bubble burst in 2008.

The guide continues, saying, “One of their biggest concerns is that first-time home buyers are being priced out of the market. First-time buyers are essential to sustaining a healthy housing market because they provide a pool of buyers for those wishing to sell their home and upgrade to a new one of greater value. Without a strong supply of first-time buyers, existing home owners will have difficulty selling their home or even reaching qualified buyers. These economists also point to lackluster improvements in the unemployment rate and the influx of new investors willing to pay above list price for rental homes as complications that serve as further evidence that a bursting housing bubble is inevitable.”

Other factors cited as evidence of a potential housing market bubble burst is the lag in new construction and a shift in loan practices which is forcing most prospective homeowners toward FHA and non-bank loans which typically have lower down payment requirements. Lastly, Loan Love explains,

“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.”

For more information on this subject, click here to read the full guide at LoanLove.com.

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Kevin Blue
Loan Love
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