Thousands of home equity loans made in the peak years of the housing bubble are just starting to reach their 10th birthday, which for many borrowers will bring very bad news.
Between the stock market, bitcoin, and tech IPOs, today everyone seems in a race to spot the next biggest asset bubbles readying to pop.
The term “asset bubble” indicates that there is a marked, noticeable divergence between the market price of an asset and its fundamental value. In other words, something that people store value in – a coin, a house, a share of stock – is valued much, much higher than the thing itself could possibly be worth.
How much do higher mortgage rates reduce home sales?
There’s a new idea sweeping through the country. It’s called dignity mortgages.
All you have to do is look at a price chart of Lennar Corp (NYSE: LEN) to see the proof that the U.S. housing market is on the mend.
Since January 2012, shares of the Miami, Fl.-based new homebuilder have more than doubled.
In fact, since the industry nearly collapsed six years ago, new-home construction for builders like Lennar is now clearly on an upswing.
According to the March 2013 report from the U.S. Commerce Department, new home construction was on pace for more than one million units for the first time since the gaudy days of June 2008.
Much of this home-buying fervor can be attributed to a few important points:
1. A pent-up demand that has built up over the last six years,
2. Low inventories,
3. And an outrageously low interest rate environment thanks to the Federal Reserve.
The question now is whether or not the “Housing Bubble 2.0” still has legs, making Lennar Corp. a smart new buy with plenty of room to run.
Is Lennar Still a Buy?
Of course, evaluating Lennar on its own merits is a fine exercise in due-diligence.
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