Bank of America economists are nixing concerns about a housing crash like the one experienced in 2008. Instead, they say, the market is more reminiscent of four decades ago.
Home loans were also easier to get in the years leading up to 2008 with looser standards as the norm. Lenders didn’t check income, made loans to risky borrowers, and allowed purchases with no money down. They also peddled irresponsible adjustable-rate mortgages that later ballooned balances and had no cap on rate increases.
Similarly, home prices climbed nearly 21%, before flattening to 0% yearly growth basis in June of this year. Existing home sales have plunged nearly 40%.In this July 2, 2008 file photo, a bank owned home is seen for sale in Sacramento, Calif. "We remain cautious of potential turbulence ahead," the researchers noted. Only a cut in rates can improve affordability and create a "stable and healthy housing market."