Will America’s housing boom lead to another financial crisis?

It is hard not to feel uneasy, but lending standards are much higher | Finance & economics

6/18/2021 11:30:00 AM

House prices have risen 13% on the year, the biggest jump since before the 2007­-09 financial crisis

It is hard not to feel uneasy, but lending standards are much higher | Finance & economics

.It is hard not to feel unease at the spectacle America’s housing market is making of itself. House prices have risen 13% on the year, the biggest jump since before the 2007-09 financial crisis. Inventories of homes for sale have plummeted: there are so few on offer in America that there are currently more agents than there are listings. The typical home sells in 17 days, a record low, for 1.7% more than its asking price, a record high. When Redfin, another property platform, conducted its annual survey of around 2,000 homebuyers, 63% reported having bid for a home they had not seen in person. The last boom in house prices was followed by a deep and painful recession. Is history likely to repeat itself?

Trump 'soft coup' busted by 2021 leak of secret DOJ notes Rep. Connolly: Fmr. AG Rosen avoided direct questions in select committee to protect Trump DOJ sues Texas over Abbott order on COVID-carrying migrants

Consider the mixed news first. The average loan to value of a new mortgage in America is a reasonable-sounding 83%. On the reassuring side, this figure has not crept higher even as prices have soared. The worrying aspect is that borrowers are bifurcated. If a homebuyer can put up 20% of the value of a property, they do not have to buy private mortgage insurance. As such around 40% of borrowers make a 20% or greater down-payment. Most of the rest—more than half—put down less than 10%. Given how rapidly prices in some markets have soared, a house-price slump could leave some of them underwater.

And yet compared with the past, borrowers are in much better financial shape. Just a quarter of mortgages originated between 2004 and 2007 were for people with “very good” credit scores (above 760). An eighth of borrowers were “subprime”, with scores below 620. Standards are higher now. In 2019 60% of mortgages were made to those with scores above 760. This share climbed further during the covid-19 pandemic as banks, fearing losses, tightened lending standards: 73% of mortgages made in the first quarter of 2021 went to borrowers with very good credit scores. Just 1.4% went to subprime borrowers. headtopics.com

There is anecdotal evidence of caution from mortgage bankers, too. They are reputedly calling up workplaces to ensure that employees relocating out of the big, high-cost-of-living cities will be allowed to work remotely indefinitely. One bank reports that its busiest lending businesses have been those catering to the well-heeled: mortgages for second homes and “jumbo” mortgages (those bigger than $550,000). If the roaring housing market of the mid-2000s was the product of reckless lending to unreliable borrowers, the boom now is made of different stuff: large loans made to wealthy borrowers with long credit histories in search of greener pastures.

Read more: The Economist »

‘The Take’: Scarlett Johansson Sues Disney, ‘Jungle Cruise’ Hits Theaters, Big Trailers Stir Oscar Buzz

Scarlett Johansson hits Disney with an industry-shaking lawsuit weeks after the day-and-date release of her Marvel movie “Black Widow” and just one day before Disney sets sail with Dway…

There is a moratorium on foreclosures and evictions. Once that ends the market will be flooded. nice

Millions fear eviction as housing crisis worsensTwo new studies say the nation’s housing availability and affordability crisis is expected to worsen significantly following the pandemic. this is terrible news the border open. and the united state citizens dont have home for living in ? wtf This is gonna be bad 🤷🏾‍♀️🤷🏾‍♀️🤷🏾‍♀️

The U.S. Averted One Housing Crisis, but Another Is in the WingsThe United States averted the most dire predictions about what the pandemic would do to the housing market. An eviction wave never materialized. The share of people behind on mortgages, after falling steadily for months, recently hit its pre-pandemic level. But a comprehensive report on housing conditions over the past year makes clear that while one crisis is passing, another is growing much worse. Like the broader economy, the housing market is split on divergent tracks, according to the annua The drama Yahoo comes up with. How much of it is true? A question The pandemic didn't cause any of those things.The lockdowns and restrictions did. Our goverments had a choice.

Trevor Noah reacts to Juneteenth becoming a national holiday'Symbols are a big part of America, and they can have real-world effects.'

America has spent over a trillion dollars fighting the war on drugs. 50 years later, drug use in the U.S. is climbing again.Did the war on drugs work? The U.S. has locked up more people in prison than ever, and one in five of the almost 2.3 million incarcerated people are behind bars for a drug offense. Was it all worth it? Huge waste of money and resources horrible No

'Impending wave of evictions' looms as pandemic moratorium nears expiration, Harvard study warnsA potential housing crisis looms over the nation's post-pandemic recovery, researchers warn, as more than 4 million Americans said they could lose their home in the next two months. horrible Muslims feeding us stories. Those houses should have belonged to the people, and it was the capitalists who possessed the fruits of the people's labor.

Africa's Covid patients 'dying from lack of oxygen'Health agencies and medics tells the BBC of a growing crisis facing low-income African nations. They have all had the chance to develop their own industries but prefer to be corrupt and scrounge from other nations, if the will was there in the first place all these countries could be really profitable and stand on their own feet.