10 Years After the Bubble: Buying Then vs. Buying Now

Back in 2007, we were just starting to see what would become known as the bursting of the housing market bubble.

That was ten years ago. And today? Is buying a home a better option than it was then? Without a doubt, the answer to that is yes.

Let’s look at how things have changed in ten years:

Interest rates then…In 2007, the average interest rate on a 30-year fixed-rate mortgage was 6.34 percent, according to Freddie Mac’s Primary Mortgage Market Survey. We didn’t see rates below 5.0 percent until April 2009 and they wouldn’t drop below 4.0 percent until November 2011.

Interest rates now…For the past three months, the interest rates on a 30-year fixed-rate mortgage have been below 4.0 percent and the rates have been nowhere near 5.0 percent—let alone 6.0 percent—for over six years, when they came in at 4.95 percent in February 2011.

Home prices then…According to data from the National Association of Realtors, the national median home price fell from $230,200 in July 2006 to $217,000 in March of 2007—a drop of nearly 6.0 percent, the largest drop since the late 1980’s.

Home prices now…Today, home prices are back above the peak we saw in mid-2006. The latest figures—from August—mark the 66th straight month of year-over-year increases. However, the difference in rising prices now as opposed to ten year ago is that no one is talking about a bubble bursting these days.

Home values then…The S&P/Case-Shiller U.S. National Home Price Index—which tracks purchase price and resale value—gives us a good idea of home values. Between June 2006 and April 2009, the index fell 38 basis points—an astounding drop of over 20 percent in home values nationally.

Home values now…The latest figures from the S&P/Case-Shiller U.S. National Home Price Index show robust home values that have been generally rising since early 2012 and are currently sitting at an all-time high—a very good sign for those who are looking to buy.

Market conditions then…Many potential buyers were leery of buying back then, and maybe rightly so. This fear was reflected by the U.S. Bureau of the Census’ Monthly Supply of Houses which estimated the monthly supply at an all-time high of 12.2 months in January 2009.

Market conditions now…Today, the monthly supply of homes on the market is a much more reasonable 6.1 months as of August. Confidence in the market is up and we’ve seen high buyer demand throughout the summer months.

As always, keep in mind that housing conditions in individual markets can vary, so to get the best up-to-date information on your particular area, talk to your real estate agent and mortgage professional.

For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.

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