Solano Real Estate Scene: Are we in another housing market bubble?

Home values have at least doubled in Fairfield over the past nine years, and in some neighborhoods tripled. Appraisals are based on recent home sales of similar size and vintage within a mile of the subject property. The Great Recession caused the Wall Street-created bubble to burst in Solano County in 2008. In April 2007, the air in the bubble began to leak out when nearly all the mortgage companies in America stopped selling stated income “liar loans.” Consumers still wanted these types of loans and thousands of lenders who had become financially dependent on the profits of selling prime and sub-prime stated income and asset loans were devastated. The desperate “stated income” consumer could no longer refinance their home to pull cash out of their real estate ATM to stay afloat. From 2004 through April 2007, thousands of local homeowners refinanced several times and many pulled out every ounce of equity that they had by early 2007. The desperate Wall Street lenders and privately held mortgage companies that were making a fortune selling nearly 100 percent “liar loans” pretty much all went broke and either closed down bankrupt or were purchased by larger banks. Chase bought Wamu, BofA bought Countrywide and Wells Fargo bought Wachovia, formerly World Savings. The difference between this market and that market is that nearly 100 percent of every mortgage closed in the past 10 years has been made to a buyer that had to provide proof of income, assets along with a decent credit history. The bubble question has been popping up on my desk lately because of the past nine years appreciation of 200 to 300 percent and the frustrated buyers inability to find what they feel is an affordable home. The largest home shortage since 1946, unemployment at a 50-year low and strict credit standards makes a real estate bubble burst unlikely for at least the next 10 years in my view. Even if a recession hits in 2020 or 2021, as some suspect, I don’t think single family housing will take a significant hit in the most affordable of all the Bay Area counties. A home is like milk or water, everybody needs a home.