One of Zillow’s top executives played down worries that the housing market might be in the midst of a bubble, arguing homebuyers today are more qualified and mortgage products are sounder than was seen before the housing crash of 2008.
Zillow Chief Operating Officer, Jeremy Wacksman, shared his perspective Thursday on the Axios Re:Cap podcast, where host Dan Primack asked him about what’s causing home prices to skyrocket and whether those levels are sustainable.
“You’re seeing, I think, record-high FICO scores for traditional mortgage applications,” Wacksman said. “You’re seeing very conventional mortgages. You’re seeing not enough supply on the market. Homebuilders will come, but it takes a long time to build inventory.”
Housing experts have laid part of the blame for the crisis of 2008 on a variety of unstable mortgage products that were prevalent at the time, including loans with adjustable rates that targeted less-than-qualified borrowers. When these rate increases were triggered, many homeowners could no longer afford their payments, and a wave of properties went into foreclosure.
By contrast, much of the new demand that Zillow has seen is coming from millennials and other new classes of homebuyer finally entering the market, Wacksman said. Existing homeowners are also in a better financial position, and are sitting on more equity than many were more than a decade ago, he said.
The pandemic has also played a role in the red-hot housing market, he said. Some employees have different needs from their residences now that they’re working from home more often, prompting a burst of real estate activity that Wacksman referred to as “the great reshuffling.” Others may be able to entertain moving to other parts of the country altogether.
“As more employers adopt more flexible work arrangements,” Wacksman said, “that allows people to really think about, where do they want to live? We’re seeing this concept of a digital nomad arise.”
Listen to the full podcast appearance here.