The seeds of the next housing crisis have been planted....

http://www.msn.com/en-us/money/real-estate/the-seeds-of-the-next-housing-crisis-have-been-planted/ar-BBsD0P9?li=BBnbfcN

I wavered if I should post this article on my blog, however here it is since I want all my clients to be well informed and I pride myself on being transparent with clients. The reality is, values go up and values go down. Having a well informed, candid, Realtor on your side is imperative. I am a factual, realist person and want the best for my clients. Many people only will only paint a rosy picture to get you to buy or sell NOW so they get their commission. I want clients to have a full understanding of market. Even though this article talks negatively there is positive spin to it, since we are not repackaging these loans into investments the 2008 crisis shouldn't happen again.  Hindsight is always crystal clear.  And this is just one article.  There might also be opportunity if this happens to purchase at great prices.

Here are a few of the main points taken from the article.

Here are some other troubling anecdotal signals on the housing market:

1. A major financial website recently ran a guide to the best cities to “flip” houses in. (I don’t want to encourage the behavior.) Real estate speculation via house “flipping” was another early sign of trouble ahead.
2. A few days later, news arrived that home prices in the Bronx had shot up by an astonishing 30% in the first quarter. Crazy advances in home values were, a decade ago, also a signal of trouble ahead. 
3. Ads, then as now, were running on TV for “quick mortgages.”

Stephen Oliner of the American Enterprise Institute the Ziman Center for Real Estate at UCLA, who tirelessly tracks the housing market for signs of trouble.  His take was not exactly encouraging. We’re actually a lot closer to potential housing-market problems than you might think. The reason? Easy credit is back.

But first, thankfully, at least a full-blown repeat of the 2008 financial crisis is unlikely. That’s because banks aren’t amplifying the problem via wholesale repackaging of home loans into risky investment instruments.

Signs of trouble brewing in housing:

1. We’re just about back to the zero-percent down payment
2. Buyers are stretching their budgets to purchase homes
3. The upshot: We’re a lot closer to 2007 than you might think
4. Home prices are rising a lot relative to income
5. Washington is not helping

In the first quarter, GDP grew only 0.5%. That’s pretty close to recession. If the economy were to tip into recession, and people started losing jobs, a lot of homeowners would find themselves in over their heads.