As home prices have rapidly appreciated over the last two years, sentiments have grown over fears of a looming housing bubble, or crisis. Surely, continued double-digit appreciation is highly unlikely moving forward. However, imminent price crash is hard to imagine analyzing the market through a lending lens.
In the years leading up to the mortgage meltdown (2007-2008), a huge focal point and core issue was the extension of sub-prime loans and predatory lending practices that have disappeared from the marketplace.
Today, accessibility to credit largely remains focused on an individual’s debt-to-income and ability to repay. With rising rents, rising interest rates and limited inventory, it would be an extreme outlier and go against historically validated core economic principles to suddenly enter a market of declining home values, coupled with panic selling and high foreclosures.
From a local perspective, northeast Indiana continues to attract individuals from all-across the country. Our historically low cost of living and home values are just now catching up to national averages. While affordability is declining, we do not anticipate a looming housing crash from a lending lens.