Homes are more expensive than ever in seven of the 20 cities included in the Standard & Poor’s/Case-Shiller U.S. National Home Price Index, but a bubble isn’t set to blow.
Forbes reports U.S. home prices have risen by 5% annually for the last two years and are approaching the record highs seen before the financial crisis in 2008. Portland (12.4%), Seattle (11.2%) and Denver (9.4%) saw the greatest year-over-year highs.
However, David Blitzer, chairman of the index committee at S&P Dow Jones Indices, tells the magazine there should be no fear of a repeat of the housing crisis.
“There is no reason to fear that another massive collapse is around the corner,” says Blitzer. “The run-up to the financial crisis was marked with both rising home prices and rapid growth in mortgage debt.”
Even though housing prices have soared, the amount people who are borrowing hasn’t swelled nearly as much as it did before the financial crisis.
Outstanding mortgage debt on family homes for four people or less is 13% below the peak in 2008, according to S&P Dow Jones Indices.
Mortgage rates have been at record lows thanks to the Federal Reserve, but policymakers are expected to raise rates before the year is over.
