The housing market crashed 16 years ago. Why a repeat blowup looks unlikely.

That has people on edge about the another bubble in the housing market, particularly with higher interest rates pressuring sale activity after home prices skyrocketed 20% during the pandemic.

A big reason for their call is that most homeowners refinanced at ultra low pandemic rates before the 30-year fixed mortgage rate topped 7%. That’s helped cushion many families from higher rates in 2023, unlike when the Federal Reserve was raising rates in some 15 years ago and the proliferation of “affordability” products in mortgage finance, including adjustable-rate mortgages, backfired.

“Today, most loans originated in the mortgage market have fully-documented borrowers,” wrote Lotfi Karoui’s credit research team at Goldman. Their take is that a strong labor market, a very low borrower delinquency rate and low supply of homes due to a decade of underbuilding will keep home prices rising modestly in 2023 and 2024 “absent any negative shocks to the broader economy.”

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