Is our current real estate market actually experiencing a bubble?
“Are we in a housing bubble? Are we heading into another housing crash like 2007?” I often get these questions from buyers and sellers these days. This market may feel similar to the 2007 market due to high prices, but there are a few major factors that make our current situation quite different.
Real estate bubbles are very rare. The 2007 housing crisis happened due to a series of events and decisions that wouldn’t occur today. Back then, lending standards were very relaxed and adjustable-rate mortgages were popular. Homeowners also took out risky mortgages and had almost no equity; once the market fell, many loans were worth more than the houses themselves.
“What we’re going through today is totally different from what we saw back in 2007.”
Today, homeowners’ equity is at an all-time high, and buyers are paying with cash or are extremely qualified for their home loans. New home construction is also lagging behind. Construction is more expensive and focuses more on luxury homes than starter homes. It’ll likely take years before supply and demand balance out again. All in all, what we’re going through today is totally different from what we saw back in 2007.
If you have any questions, reach out to me by phone or email. I look forward to hearing from you.
