More consumers believe we’re in a housing bubble

Are we in a housing bubble?
Skyrocketing home prices have some concerned about another housing bubble.

Housing prices have been rising dramatically for the past several years. This has led to many consumers believing that we may be in a a housing bubble. In fact, a recent survey found that 77% of home buyers and sellers believe their local market is experiencing a housing bubble.

What is a housing bubble?

Like many types of asset bubbles, a housing bubble typically consists of two main phases. The first phase consists of housing prices rising dramatically while being driven by speculation. In the second phase, housing prices drop dramatically. Although many people may vividly recall the 2008 housing collapse, many leading housing economists are not concerned about this repeating now. As for real estate agents, 56% of those surveyed were not concerned about a current housing bubble either.

So what is different in this market? For starters, housing inventories continue to remain at historic lows. Furthermore, credit also remains tight with lenders not issuing risky loans as they did during the housing collapse of 14 years ago.

Summary

Looking ahead, home price growth is expected to slow down in 2022. In fact, the National Association of Realtors® predicts price growth to moderate to 3% to 5% in 2022. Needless to say, this is much lower than the nearly 16% annual growth existing-home sale prices posted in December 2021. In addition, with inflation levels at nearly 40 year highs, The Federal Reserve will be forced to continue raising interest rates. Higher rates will also stabilize or reduce buyer demand, thus reducing the risk of a real estate bubble bursting.

At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.

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