Rising home prices and mortgage rates are pushing more prospective buyers out of a supercharged housing market, but today’s buyer pool is far less vulnerable than the housing bubble buyers of 2008, Fortune reports. The share of buyers with “superprime” FICO scores of 720 or above is 75%, while just 25% of buyers were backed by similarly strong credit in the years preceding the 2008 housing bust.
Fewer buyers are leaning on risky adjustable-rate mortgages (ARM) than during the Great Recession, and housing debt compared to disposable income has also fallen 30% from levels seen during the bubble and bust over a decade ago.
“The quality of outstanding mortgage debt is pristine,” the Bank of America team wrote in a Friday note. “Today's buyers are less vulnerable in case of an economic slowdown, and the riskiest buyers aren't in the market.”
“Homebuilding is still highly cyclical, but the industry has changed for the better since the housing bubble, and we see many reasons that this cycle will not end in a crash,” the Bank of America team concluded.
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