Three reasons our real estate market is not in a bubble in 2022.
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Are we in a housing bubble? This question is causing plenty of conversation right now, and some people are worried we’re heading toward a housing crash like we had back in 2007. Many buyers and sellers think our current market is very similar to the one we had back then because of our high home prices. However, three main factors make our present market very different from that of 2007:
1. Real estate bubbles are rare. The 2007 housing bubble was brought about by a series of events and decisions that just wouldn’t happen these days. Lending standards were relaxed, and adjustable-rate mortgages became extremely popular. Homeowners ended up getting risky mortgages and had almost no equity in their homes. Once the market fell, their loans were worth far more than the houses themselves, so many people were forced to sell, which caused a massive amount of inventory to hit the market in a short period. Nowadays, most homeowners are in very good equity positions, and adjustable-rate mortgages are less common.
2. New construction lagged behind. They’ve been focusing on building mostly higher-priced houses and much fewer starter homes. So it’s likely to take years before supply and demand balance out again.
3. Buyers are well qualified now. Today, buyers are either paying with cash or are well qualified for their financing, which means they’ll be capable of holding on to their homes until they’re in a great equity position to sell.
Due to these factors, we’re not in a real estate bubble. If you have any questions, feel free to reach out to me via phone or my website. I’d love to chat about this market, how it differs from 2007, or anything else concerning real estate.