Housing market not a bubble, Realtors, bankers say

Jan. 30—In recent months, CNN, the Washington Post and several other national media outlets have asked if America is heading into another housing bubble, like the one that crashed the economy in 2007-09 and led to the Great Recession.

The general conclusion has been that economists say we're not.

But they said the same thing back then too, CNN pointed out.

Last year, local realtors sold more houses than in any year since the Great Recession and homebuilders were also setting post-recession records.

And the price of the average house sold here in December — $195,456 — was up 13% from a year earlier.

Stephanie Rhinerson, a mortgage loan officer at Independence Bank, says a lot has changed in banking since the Great Recession.

"As a lender, whether we are lending in-house or it's a government loan, we have guidelines to ensure that we're not lending more than the borrower can pay," she said. "We also look at the value of the home to make sure it's worth the amount we're lending.

"If the person doesn't qualify now, I can set them up on a six-month plan to improve their credit score and help them qualify for a loan in the future."

Rhinerson said, "People are paying higher prices for homes because interest rates are so low. As rates tick back up, I don't know if they will continue doing that. Rates are picking back up now, but I think they will remain low. People got spoiled when they were super low."

A 30-year loan this week was at 3.875%, she said.

Kyle Aud, Owensboro market president of German American Bank, said, "There aren't as many 100% loans available now like there were back then. You've got to put a little skin in the game these days.

"Today, we're dealing with buyers who are in better shape to buy. There is still room for interest rates to grow without hurting the housing market. Rates have been creeping up since mid-2021, but they're still fantastic."

Aud said, "Wages are rising. We're better prepared now than we were in 2007-2008-2009. Prices of houses have gone up, but we rely on local appraisers to ensure that the house is worth the loan."

Michelle Wiesman, president of the Greater Owensboro Realtor Association, said, "A lot of the lenders have programs now that help people who want to buy a home rebuild their credit if it isn't high enough to qualify for a loan."

And Jason Bellamy, immediate past president of the association, said, "I haven't worked with very many who have credit challenges."

CNN reported last fall, "The previous record for rising home prices was a 14.4% year-over-year gain in the fall of 2005, according to Case-Shiller. The US housing market blew past that mark in April of this year, with a new record set every month since. Year-over-year price increases stand at 19.9%."

The story said, "The median price of existing homes now stands at $352,800, according to the National Association of Realtors. Home values stand at one third more than the peak of the last bubble in early 2007, Case-Shiller reports. And by just about every measure, housing affordability has plunged, even as near-record-low mortgage interest rates has kept home payments in check."

Bankrate.com wrote recently, "The U.S. housing market is on fire. Double-digit appreciation is the rule. Giddy sellers are sifting through multiple offers. Frantic buyers are forced to pay more than asking prices — sometimes by $100,000 or more."

It added, "The last time the U.S. housing market looked this frothy was back in 2005 to 2007. Then home values crashed, with disastrous consequences. When the real estate bubble burst, the global economy plunged into the deepest downturn since the Great Depression."

Housing prices peaked in 2006 and continued to decline until 2012.

Today's housing shortage is traced back to those years.

Keith Lawrence, 270-691-7301, klawrence@messenger-inquirer.com