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This recent run-up in the market is different. Buyers are now having to qualify for a 30-year fixed loan with all of their payments included. In most cases, a significant down payment is also required. When people have equity in their homes, it provides a cushion against a potential bubble or downturn in the economy.
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We have a booming real estate market here in San Diego, and appreciation has been increasing a lot in the past few years. There has been some talk about a real estate bubble forming, and I want to address this issue today.
To put it plainly, I do not think a bubble is forming here in San Diego. I say this because there has been a dramatic change in the way people are getting loans. They were handing out loans like candy back when the market crashed. People with no jobs and no income could qualify for loans, and that would never, ever happen today. There were lots of zero-down loans, and lots of other reckless lending practices that contributed to the bubble forming and the market crashing.
This recent run-up in the market is different. Buyers are now having to qualify for a 30-year fixed loan with all of their payments included. In most cases, a significant down payment is also required. When people have equity in their homes, it provides a cushion against a potential bubble or downturn in the economy.
I hope this answers your questions about a real estate bubble forming. I don't think we have a lot to worry about, because lenders have improved their standards and people now have more equity in their homes.
As always, if you need assistance with San Diego real estate, please don't hesitate to contact me!
