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5 Reasons We Aren’t in a Bubble

Here are five reasons we aren’t likely to see a market crash anytime soon.

A question we receive all the time is whether we’re entering another housing bubble. If you don’t know how crazy our real estate market has been for the last couple of months, you may be living under a rock. Homes are flying off the market and home values are increasing, and these things spark the questions we’ve been getting about bubbles and housing crashes. Here are five reasons why we probably don’t have to worry about a bubble for the next 12 to 24 months:

  1. Many homeowners don’t have loans. Over 38% of homeowners own their homes free and clear, which is a strong pillar underneath the housing market.
  1. Sound economic principles. Unlike 2007 through 2009, supply and demand are currently acting naturally. Since supply is very low, demand is especially high, which is why this market is the complete opposite of what we saw leading up to the Great Recession. Home prices are rising, and we’ll likely continue to see that for a while. 
  1. Home equity. Right now, the average homeowner in the U.S. has more than $200,000 of equity, which is unprecedented.
  1. Higher lender standards. Contrary to 2007 to 2009, lenders are now much more critical of buyers. They’re going the extra mile to ensure that everyone can repay their loans. Those lousy stated income loans are a thing of the past; they were a huge reason we had the problems that we did during the Great Recession. 
  1. Forbearance. This is when a lender allows a borrower to put their payments on pause. We’ve seen this the last couple of years during the pandemic and with the CARES act. While plenty of homeowners took advantage of these government-backed initiatives, 85% of those borrowers have come out of forbearance either by repaying the balance in full or enacting a special repayment plan to get caught up. 

“Homes are flying off the market and home values are increasing.”

Today is an excellent time to both buy and sell a home. If you’re considering buying soon, don’t wait because prices are likely to climb again. 

If you have further questions about this or any other real estate matter, feel free to call, text, or email us. We look forward to helping with your real estate needs.