MARKETS & TRENDS
ECONOMY
Bursting the Real Estate Bubble Concerns BUBBLES ARE UNAVOIDABLE, BUT IT’S NOT HAPPENING YET
by Polina Ryshakov
hile it might feel like we’re in a similar housing mar- ket bubble circa 2006, it’s not the same. In order for
W
THE CURRENT POOL OFMORTGAGES As a whole, the mortgage pool gives insight into the types of buyers purchasing homes in the current market. The mortgage data loan origination cohorts reflect record credit scores and relatively low loan-to-value ratios. Addi- tionally, new mortgages are mostly extended to cred- it-worthy borrowers. Due to competition, only buyers with the strongest track records and largest down payments can win bidding wars. This is in stark contrast to the Great Recession, where there were less qualified buyers with higher risk profiles buying homes.
there to be a bubble in the first place, there has to be a catalyst that causes the housing market to crash. His- torically, there are a variety of factors that can lead to a bubble and burst. For example, banks’ use of risky finan - cial products, a larger supply of homes than demand, or enough speculative activity from investors to drive prices up very high. Right now, there’s no bubble to pop. All economic indi- cators point to a continuation of the torrid housing market. In this article, Sundae’s Chief Economist Polina Ryshakov shares why a bubble hasn’t formed—yet.
MORTGAGE ORIGINATIONVOLUME BYRISKSCORE
$1.2T
<620
620–659
660–719
720-759
760+
$1T
$800B
$600B
$400B
$200B
$0
Source: Sundae.com
78 | think realty magazine :: december 2021
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