There are marked differences in today’s run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent, and mortgage underwriting is prudent.” So, I think we know that in our business. Certainly, if you were around in 2008, you remember all the loan products that were in the market that aren’t there today, but maybe somebody that you’re working with thinks I heard that those loans products were coming back. Here’s a great way to show them the reality of the market. The Fed just came out and said, “Mortgage originations with a credit score below 620 comparing 2006 to last year. Back in 2006, $376 billion was originated in this country with a credit score of 620 on a mortgage loan. Last year, it was just 74 billion.”  

(Dr. Frank Nothaft)

So, what we do in fact know today, is that those that are buying homes and are qualified, have better credit. This is very, very different from what we saw back in the housing crisis a while ago however.

The short answer is no, we are not in a housing bubble. Many understandably are thinking that we are indeed in one however, this is simply incorrect.  Let me break it down a bit and explain. It’s an overall textbook supply-and-demand issue. 

The imbalance of supply and demand we’ve talked about extensively, is making us look at  rapid price acceleration and then many are going, “Gosh, this feels unstable. This feels like last time,” and this graphic to the right probably is the best graphic to communicate where we’re at as of now. Completed housing going all the way back to the ‘70s, in which you can see for the past 13 years, we have been below the 50-year average.

There were literally more homes being built in this country back in the ‘70s and ‘80s than there have been in the last ten years, and that’s causing the issues that we have now in 2021! (How fascinating)

The next question I look at is foreclosures and the future of possible foreclosures. Are we going to see a wave of foreclosures coming to the market? Now, let's dive in with a look at where experts originally projected forbearance would lead. 

So, originally, experts said 30 percent of all mortgages would go into the forbearance program, and all of those would eventually lead to foreclosures (yikes!)  Now, what we do know is that in reality, that number topped out at 8.47 percent of mortgages, and today, it’s down to three and a half percent, and of that three and a half percent that equates to 1.86 million mortgages.

Now, for a moment lets  talk about what happens when homeowners exit the forbearance plan. Now, you’ve seen this all before, (this is the most current data as of July 11th of this year), and what this pie graph to the right shows is that the green and the blue sections, the majority of homeowners exiting the forbearance plan are walking away just fine. 

They’ve either come current on their payments, or they’ve worked out a plan with their lender, such as a loan deferral or a modification, something that they didn’t have the opportunity to do in 2008 (this is good!) And what you’re going to see over time is that that blue section is going to continue to get a little bit larger, and that’s because more people are working out plans with their lenders and working to the goal of keeping their home. So, that’s a huge differentiator. Where we may still have an issue is the red section, the homeowners that are leaving the forbearance plan without a loss- mitigation plan.

In the Town of Hingham, the number of new homes entering the market has remained somewhat consistent as usual for the area.  The Average Sale Price has remained in the million dollar bracket however up to 1.2 this month. In addition, the town is up to 25 homes sold!

In the Town of Marshfield, the number of homes sold remained consistent from January through July. The time properties are on the market on average has decreased from 20 in June back down to 9 like months previous (May). The Average Sales Price has increased again to $732K!

In the Town of Mashpee, the Average Sale Price increased significantly from 750k in February to a few moths later to the million dollar bracket. The Average Days on Market have decreased significantly to compared to March of 111 days. That is a HUGE change. The number of homes sold has remained consistent month over month but has increased by one from 18 to 19 since the month of June.