Why We Are Not In A Housing Bubble

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WATCH HERE: Why We Are Not In A Housing Bubble

The most asked question about real estate today on Google = Are we in a bubble? The answer – no, we are not in a housing bubble. The current environment is very different from what we experienced back in 2006-2008.

There are two reasons why we are not in a housing bubble today: 1. There are 1.2 million homes for sale. During the Financial Crisis, there were 4 times more homes on the market – We are not seeing that kind of inventory. 2. There aren’t shady or risky mortgages happening. The average homeowner is on fixed-rate mortgage payments for 30 years.

Bubbles happen when you have risky mortgages that balloon causing people to not be able to pay back their mortgage and lower down payments. And what we have now is home prices that are rising, higher down payments than ever before and mortgage rates that are fixed for 30 years.

Because of the rising prices for housing – homeowners have a lot of equity. According to the Case Schiller 20-City Home Price Index released this week, prices increased almost 15%. One issue a lot of people are seeing is with the forbearance program. But because the equity homeowners have in their homes, experts are saying that people will sell their homes instead of going into foreclosure – and instead of a foreclosure sale that means added inventory to the market.

Also, there is more homebuilding activity and builders are eager to produce more as we have seen from permits being submitted. In turn, inventory levels will get better for the army of homebuyers out there waiting for their opportunity to buy. Economists believe that prices for homes may decline slightly but there will not be any persistent decline.

Today, we are in a much more stable environment and nothing shows that we are in a bubble. For now, if you’re thinking about selling your home, it couldn’t be a better time. For buyers, let’s talk today about how we can position you best in this competitive market.