Housing Bubble May Not “Burst”

As home values ease down and mortgage rates remain low, many homeowners and investors are talking about the real estate bubble, and how it has burst. Not so, according to economists from the National Association of Realtors. The level of home sales was still the third-best on record this year, though the second half of 2006 saw the slowing of the trend. Mortgage professionals are starting to see a small increase in purchasing activity as sellers drop their prices to more moderate levels in response to lagging values.

The only aspect of the market that is being hurt is refinances, which have inadvertently been hurt due to the purchases craze of the last couple of years. When homeowners bought into the market at high prices, and those prices have since cooled, it is harder to pull from the home’s equity during a refinance. To assists with this situation, many lenders are offering incentives to homeowners to refinance in the current market, especially to get them out of adjustable rate mortgages that may be about to readjust.\r\n