There’s a housing bubble lurking in the recession - btbirkett@gmail.com - Gmail

There’s a housing bubble lurking in the recession - btbirkett@gmail.com - Gmail

Refi Madness They say you shouldn’t fight the last war, but what about fighting the current war by planting the seeds of the next one, which may look a lot like the last one? That sentence is about as confusing as this K-shaped recession has at times been, with GDP and employment collapsing but the values of stocks and houses soaring. Higher home prices along with record-low mortgage rates have helped ease the recession’s pain, giving borrowers lower monthly payments and a magical windfall of home equity to spend. If this seems too good to be true, then Danielle DiMartino Booth warns it probably is. To grease the skids of the refi boom, lenders are increasingly doing away with pesky human appraisers, who tend to need “money” and “time,” relying instead on algorithms to spit out estimated home values. Increasingly those are overinflated, raising the risk of a painful reckoning for borrowers and banks when values sink to meet reality but loan balances don’t. And then the new war will look a lot like the old one.