Wednesday, October 26 , 2016, 9:44 pm | Fair 59º


Ed Fuller: Housing Market Recovery Is Structurally Sound

What a rebound! The past two years saw the median single-family home price in the Santa Barbara metro area increase by 39 percent.

Ed Fuller
Ed Fuller

Along with the stock market, many have been raising concerns that we have entered another housing “bubble.” But there are differences this time.

The biggest one is home mortgage qualifications. The housing boom years of 2004 through 2007 saw loans of as much as 110 percent of a property's value made to borrowers who had little or no income. In the years since the financial meltdown, not only have borrowers needed a down payment, but the amount of their income that can be used to service the mortgage and all their debt has been limited to 50 percent.

On top of this, borrowers have been required to document in detail every aspect of their financial situation. This has led many an industry expert to decry the difficulties of obtaining home financing, but it is this very difficulty that has put the increasing prices of housing on firm footing.

The new crop of owners really can afford their homes, come higher or lower prices. Since nearly every new mortgage has been fixed, and at historically low rates, increasing interest rates will not change the recent owner's payments.

Rapidly increasing adjustable rate mortgages were another contributing factor to the housing meltdown in the last recession. With the new year, a new bread of mortgage has been born, one with even tighter qualifications — the qualified mortgage. This new mortgage will allow only 43 percent of a buyer's income to go toward servicing all their monthly payments, including the new property.

This is significant because because the vast majority of loans purchased in the secondary market will be required to meet these new standards, putting any further increases in home prices on firmer ground.

Ed Fuller is a real estate broker with San Roque Realty Inc. and president of the Santa Barbara Association of Realtors. Contact him at [email protected] or 805.687.1551. The opinions expressed are his own.

Reader Comments

Noozhawk's intent is not to limit the discussion of our stories but to elevate it. Comments should be relevant and must be free of profanity and abusive language and attacks.

By posting on Noozhawk, you:

» Agree to be respectful. Noozhawk encourages intelligent and impassioned discussion and debate, but now has a zero-tolerance policy for those who cannot express their opinions in a civil manner.

» Agree not to use Noozhawk’s forums for personal attacks. This includes any sort of personal attack — including, but not limited to, the people in our stories, the journalists who create these stories, fellow readers who comment on our stories, or anyone else in our community.

» Agree not to post on Noozhawk any comments that can be construed as libelous, defamatory, obscene, profane, vulgar, harmful, threatening, tortious, harassing, abusive, hateful, sexist, racially or ethnically objectionable, or that are invasive of another’s privacy.

» Agree not to post in a manner than emulates, purports or pretends to be someone else. Under no circumstances are readers posting to Noozhawk to knowingly use the name or identity of another person, whether that is another reader on this site, a public figure, celebrity, elected official or fictitious character. This also means readers will not knowingly give out any personal information of other members of these forums.

» Agree not to solicit others. You agree you will not use Noozhawk’s forums to solicit and/or advertise for personal blogs and websites, without Noozhawk’s express written approval.

Noozhawk’s management and editors, in our sole discretion, retain the right to remove individual posts or to revoke the access privileges of anyone who we believe has violated any of these terms or any other term of this agreement; however, we are under no obligation to do so.

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through PayPal below, or click here for information on recurring credit-card payments.

Thank you for your vital support.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >