A Housing Bubble?

For going on two years now, all we’ve seen in the U.S. housing market is low interest rates, rising house prices, and demand not seen in decades. In fact, many consumers liken this hot sellers market to the housing bubble of the early 2000s. You know… the one that burst and was a huge part of the great recession. Many have waited for this current bubble to burst. 

For a long time, experts said the situation we’re in now is vastly different from the 2007 housing bubble because the demand is authentic and lenders are more judicious about who gets a mortgage loan. However, new information from industry professionals is leading some to think we are indeed in a bubble and that it’s about to burst. 

Researchers and economists from the Federal Reserve Bank of Dallas are quoted as saying this current housing market is “unhinged from fundamentals.” 

As shared with CNN, those researchers wrote, “Our evidence points to abnormal US housing market behavior for the first time since the boom of the early 2000s. Reasons for concern are clear in certain economic indicators … which show signs that 2021 house prices appear increasingly out of step with fundamentals.”

The idea is that with rising prices, eventually buyers are simply just going to be priced out of buying at all. Currently, buyers are maxing out their budgets and stretching thin for fear of missing out on buying a house. They’re willing to make exceptions or pay more than they’d initially planned under the assumption that prices will never come down. 

Experts are saying: have no fear. Eventually they will.