Home prices continue to increase towards its 2006 peak, however that does not mean that the U.S. is headed into a new housing bubble, according to a CNBC interview with David Stevens, Mortgage Bankers Association president and CEO.
The increasing home prices are actually a result of what’s being built and what’s being sold, rather than an oncoming bubble, Stevens said. Home prices are rising because builders are not building enough housing stock.
While home sales continue to rise, this lack of starter homes and high competition in the market is creating an affordability crisis, Stevens noted.
He also noted that, while back in 2006 the market needed more regulation, the many regulations in place today may have gone too far.
“We had an under regulated world that created the bubble and allowed for all these unsustainable exploding loan programs,” Stevens said. “Things do over-correct, and today we have an extraordinary web of federal regulators and state regulators all regulating in the same space in housing and mortgage finance.”
This influx in regulation is causing builders to less eager to build entry-level housing stock, and causing lenders to tighten credit standards.
While the past eight years have been dominated by the housing crisis, it’s time to turn a new page and create policy that will reflect the evolved housing market, Stevens wrote in a blog.
“This over-correction needs to be resolved,” Stevens said.