A housing bubble is characterized by a significant spike in house prices due to unusual growth in demand that isn’t related to economic fundamentals such as supply & demand. Capitalism creates market cycles and we all know things can’t go up forever, but are we really about to see a collapse in home prices? Can we really expect a 2008-level real estate collapse?
Let’s examine some market facts together.
Fact #1 Supply is much lower than demand and significantly lower than during the 2007-2010 housing crash.
Fact #2 Foreclosure activity created the excess supply that caused prices to decrease during the 2007-2010 housing crash. We are currently at historic lows for foreclosure activity.
Fact #3 Lack of lending standards created the 2007-2010 housing crash. Only qualified buyers have purchased in bulk over the past decade.
Fact #4 Economic and housing experts were surveyed about the long-term forecast for home values into 2026. Even the pessimists expect homes to increase in value by 4%+ per year.
Fact #5 Mortgage interest rates are currently on the rise, but rising interest rates do not always mean declining home prices.