Housing Bubble? Not Yet.
June 5, 2022
Just more evidence that we are NOT presently in a housing bubble. As we’ve discussed, the Real Estate Cycle points to the top being 2026ish.
Fact or Fiction: “We’re in a Housing Bubble.”
Fiction: This is not a housing bubble, here’s why:
Some think that with the rapid increase in house prices over the last couple of years that we must be in a housing bubble, one similar to the 2008 housing crisis.
Here are 4 Key Factors that show that this time around is different:
- Record Equity: Homeowners today have a lot more skin in the game. In fact, the average amount of home equity in the US is at a record high of $185,000, an increase by almost $48,000 in 2021.
- Low Inventory: While we’ve seen inventory of available homes improve slightly, it’s still very low and buyer demand has continued to outpace supply by a wide margin, which is another sharp contrast from 2008.
- Qualified Buyers: With larger down payments and stricter lending standards across the board, buyers are far more qualified than the lead up to 2008.
- Appreciation Projections: While the pace of the last two years isn’t expected to continue, experts are still projecting home prices to rise by an average of 9% this year – which is historically high!