An old saying warns, what goes up must come down. With real estate prices constantly edging up, the newest trending topic is speculation in Pasadena (and the nation) that the housing market can’t maintain these dizzying price heights and could crash.
“The one thing that I keep getting asked over and over is, ‘Is this a bubble?’” Phil Shoemaker, president of originations at mortgage lender Home Point Financial, told Bankrate.com on Wednesday. “If you look at what’s going on with home price appreciation, it feels bubble-ish. But if you look at the fundamentals behind it, it’s hard to say it is.”
Local experts agree.
“I don’t think that we’re going to see a crash or a bubble,” said Pasadena-Foothills Association Realtors’ President Barry Storch. “I just don’t believe that.”
Both long-time Pasadena Realtor Darrell Done and local mortgage broker Kenji Tatsuno echoed Storch.
“Long-term, I don’t think we’re in for a crash,” said Tatsuno, who is President of Pasadena-based Kennedy Capital Corp., stressing his cause-and-effect mantra. “Everything for business is about cause and effect.”
There simply are no indicators the housing market faces anything more serious than interest rate fluctuations, Tatsuno said. Interest rates now are at historical lows, supporting buyers, and aren’t predicted to change much in the near term.
“I think we [when] go to the next month, May, June and towards the summer, probably until the beginning of fourth quarter, you will see interest rates rise,” Tatsuno predicted.
But he didn’t portray the rate rise as hurting the market. In fact, it could boost sales, he said.
“I do think it will be a temporary rise and it won’t cause a bubble. It just may cause people to act more exorbitantly and irrationally because they think the party’s over,” he said. “It’s like when people go to the Nordstrom sale, you got this mass rush on the last day of the sale. It will be the same thing because rates rise.”
Realtor Darrell Done agreed with Tatsuno that, barring unforeseen disasters, there simply is no fundamental cause in the marketplace to create a housing crash.
“I don’t think that the housing market is going to collapse unless we had some major economic tragedy or occurrence that happened to create a tremendous amount of job losses or financial concerns that would cause people to start liquidating their properties,” Done said.
Done pointed out the most recent crash was caused in the mortgage industry, but that system has been restored and is sound today.
“The case today is we still have a very strong mortgage industry and it’s been highly regulated since then,” he said. “And a lot of the stop-gap measures to protect the consumer have been put in place. So we have actually a very strong mortgage situation because mortgage rates are historically low.”