Are We in a Housing Bubble?

Here are the four main reasons the market isn’t in a housing bubble.

Home values appreciated by 10% in 2020, and they’re expected to appreciate another 5% this year. Will they continue to appreciate, or are we in a housing bubble? Here are the four main reasons why you can put your housing bubble fears to rest:

1. Housing supply is limited. The prices in any real estate market are based on supply and demand. When supply is high and demand is low, prices decrease; when supply is low and demand is high, prices rise. In real estate, we examine the months of supply of inventory; six months is a balanced market, anything higher is a buyer’s market and prices decline, anything lower is a seller’s market and prices climb. We’re currently in a seller’s market.

You can put your housing bubble fears to rest.

2. Demand is real. During the last housing bubble, people were in a buying frenzy; they were buying homes based on an impractical belief that prices would just continue to escalate. However, the demand is real right now. Millennials are the largest generation these days, and they’re getting married, having children, and ready to buy houses.

3. Health crisis. The pandemic forced people to redefine what home means to them, so many are buying and selling.

4. Low interest rates. Rates are still at all-time lows.

If you have any questions about these points or you’re considering buying or selling, give your Iron Man Realtor a call or send an email. I would love to help you.