Is Our Housing Bubble About To Burst?
Two big reasons why you don’t need to worry about a market crash.
“When is the housing bubble going to burst?” We probably receive this question at least five times a day, so we figured we’d save some time and make a blog post about it. At first, it seems like a reasonable question. After all, home prices have been increasing at a crazy pace for a long time. Surely, a correction is coming, right? We don’t think so, and today we want to discuss why.
There are two big reasons why our market won’t crash anytime soon. First, homeowners have tons of equity. During the last crash in 2008, people were receiving loans with 0% down. Because of this, many people had no equity, and when the market crashed, they had no way out. We no longer have 0% loans due to new regulations, and homes have been appreciating at record paces. As a result, the average homeowner has tons of equity and a big safety net in case things go wrong.
"We may start to see changes in our market, but we predict they’ll be gradual and mild."
The second reason why our market won’t crash is simple: supply and demand. Buyer demand is frantic, and it doesn’t look like it’s going anywhere. Meanwhile, inventory is at record lows. To have a crash, we would need to see our market completely flip on its head. In other words, we would need more supply than demand. For some perspective, we had around a full year’s worth of inventory in 2008. Now, we barely have enough to last half a month.
We may start to see changes in our market, but we predict they’ll be gradual and mild. Interest rates and inflation are rising, so demand may fall slightly. However, we don’t expect prices to drop. Instead, they’ll probably just increase at a more normal rate.
If you have questions about today’s topic, please call or email us. We’d love to hear from you!