A street in Kenton, Ohio. Jay LaPrete/AP

A housing bubble brought on the Great Recession, but the current boom may not be a prelude to another. Yet.

“This time, the executives say, will be different.”

Dreadful words to hear under any circumstances, really. But it’s especially worrying to see this line crop up in a story about housing. The Los Angeles Times reports that the nation’s largest mortgage lenders today are alternative lenders as opposed to banks, much as they were in the runup to the Great Recession.

Three of today’s largest lenders, in fact, are run by former executives at Countrywide Financial, one of the mortgage giants that plunged the nation into its worst economic crisis since 1947. And mortgages originated by nonbank lenders have jumped from 10 percent of U.S. mortgages in 2009 to more than 40 percent in 2014. With nonbank loans on the rise, is the nation doomed to repeat the recent past, even as executives tell us that nothing is wrong?

Maybe so. But the current housing boom doesn’t look much like a bubble in other important ways. Or rather, the current boom doesn’t look much at all like the disastrous mid-2000s housing bubble, at least not in the ways that made that crisis so destructive. While a bubble brought on the Great Recession, the current housing boom may not be a prelude to another bubble. At least, not yet.

That’s the conclusion of a new paper released this month from the Federal Reserve Bank of San Francisco. The current housing boom—starting after the market hit rock bottom in November 2011—has already undone a good deal of the damage in at least two respects. The median housing price today is just 8 percent shy of its peak in 2006, and construction employment is 17 percent below the high-water mark.

(Federal Reserve Bank of San Francisco)

Housing starts, on the other hand, are still well below the levels of the early 2000s—some 50 percent below the peak. That’s one way in which the current boom does not resemble a bubble. Extend the timeline out long enough, in fact, and it’s clear that new housing construction is still climbing up from the new bottom discovered in 2009. Things are improving, but nowhere near a ludicrous speed: Thanks to the high cost of land and shortage of construction labor, housing starts fell to a seven-month low in October.

(St. Louis Federal Reserve)

But there’s a better way to distinguish the current housing boom from the recent housing crisis.

“The prior episode can be described as a credit-fueled bubble in which housing valuation—as measured by the house price-to-rent ratio—and household leverage—as measured by the mortgage-debt-to-income ratio—rose together in a self-reinforcing feedback loop,” writes Reuven Glick, author of the FRBSF study. “In contrast, the more recent episode exhibits a less-pronounced increase in housing valuation together with an outright decline in household leverage—a pattern that is not suggestive of a credit-fueled bubble.”

In other words, the current housing boom has not been met with a credit boom. While nonbank lender-originated mortgages may make up a greater share of mortgages today, as the Los Angeles Times reports, household leverage is declining. So the slice of pie insured by the Federal Housing Administration may be bigger now, but the size of the whole pie isn’t growing irresponsibly larger.

(Federal Reserve Bank of San Francisco)

The difference may be tighter banking regulations and stricter lending practices, and an improving economic picture overall.

Now, something could change and the nonbanking lenders that are originating a greater share of the loans today could start pumping out more and worse loans tomorrow. Then we would see a return to the exotic products of subprime and a rise in predatory lending practices. But the data don’t show that happening. The difference may well be tighter banking regulations and stricter lending practices guiding an improving economic picture overall.

So don’t call it a bubble (yet). Call it a comeback (for now).

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