Today’s Housing Market is Not a Bubble and Here’s Why
July 8, 2022
There is a lot of talk about this real estate market and how we are heading or in a bubble and it is going to crash. However, one thing that is important to remember is people always talk but not everyone has a fully informed opinion. It is important to look at the real data and listen to what the experts have to say on this. After a recent survey from Pulsenomics, where one hundred housing market experts were asked if this market was a housing bubble, 60% of them said no. This majority does not feel we are currently in a housing bubble.
Most experts agree that the reasons for the home prices increasing in the recent past is due to low inventory and demographics. Also, they feel that there is not a huge credit risk because underwriters have tough standards and the lending standards are high.
While inventory in some areas may now be slightly on the rise, let's remember that for the longest time inventory was super low in almost every area of the market. This and the fact so many people were looking at the same time drove prices and is still affecting prices today. This is your classic supply and demand scenario.
On average according to experts the amount of homes available for sale needed to sustain a normal real estate market is approximately six months worth. Anything more than that is an overabundance and this will cause home prices to depreciate. However, like we have been seeing recently anything less than that is a shortage and will lead to continued price appreciation. Prices are simply still on the rise because there is a healthy desire for home ownership and just not enough inventory out there for potential buyers.
Back when the housing market did crash the lending standards were absolutely nothing like they are today. Then it was much easier to get approved for a loan, even if it wasn’t really in your best financial interest, than it is today. Banks and lenders have gotten much smarter and selective about the process meaning purchasers who have purchased a home in the last 10 years are far more qualified for that loan than in years past.
Here is the bottom line, most experts agree we are not in a housing bubble and we are not going to crash. The real estate market is full of ups and downs but it can eb and flow without hitting bottom like it did in the past. If you are interested in listing a home now is a great time. If you are looking to buy a home, there is slowly more and more inventory coming to the market. So call me today and let me get started working for you! I want to be YOUR realtor!