How This Market Differs From the Last Crash

Are we in a housing bubble? Here are two reasons why I don’t think so.

The most common question I’ve received from buyers, sellers, and investors lately is, “Are we heading into a housing bubble?” The question is so popular that in March, searches for the term “housing bubble” soared on Google. The short answer is no—I don’t believe we’re in a housing bubble. Today I’ll give you two good reasons why.

The last housing bubble we experienced was back in 2007, but today’s market isn’t anything like that. Back then, buyers were getting loans they weren’t qualified for, some of which financed 100% or more of the properties they purchased. Homeowners then also didn’t have much equity.

"Instead of a bubble popping, I think we’ll instead start to see a more normalized market."

In today’s market, lending standards have tightened up significantly. If you don’t have money to put down on a home right now, you’re probably not going to buy a house. Many properties are getting multiple offers; the seller typically will pick offers from the most qualified buyers. The ones who are winning are putting 10%, 15%, and 20% down, or they’re using cash they’ve pulled from the equity of their current homes.

Second, the government is being proactive about slowing down the housing market. They understand that if home prices continue to rise at this rate, we’ll experience a housing collapse. At the beginning of the year, interest rates were at 3%. Now, they’re hovering around 5.5%. The Fed’s plan is to keep raising rates until the real estate market has been curbed.

Instead of a bubble popping, I think we’ll instead start to see a more normalized market. Around six to eight months ago, nearly every property I listed had multiple offers that were well over list price within just 24 to 48 hours. Nowadays, homes are selling within a week or so and might only receive offers at or around list price. The terms are still good, but it’s definitely a different market today.

If you’re interested in learning more about what’s going on in your local market or have any questions about real estate in general, don’t hesitate to give me a call or send me an email. I’d love to discuss what’s going on in the market and how recent changes will affect you.