Are We Creating Another Housing Bubble?
By Alec Priola, Assurance Financial Group
Are we on the verge of another housing bubble that’s going to come crashing down like it did in 2008?
In short, no, and I’ll briefly explain why over the next few months.
The housing market has been red-hot for the past year due to the pandemic, stay-at-home orders, and individuals being able to work remotely. This has given many the ability and freedom to work from just about anywhere, and people are taking advantage of it. We also have historically low mortgage rates, which is driving more people into the market and driving inventory lower and lower. In a typical housing market, you want a 6-month inventory of homes available for sale to keep up with demand. The current estimate of homes available for sale across America is less than 2 months; in 2008, estimates put available inventory across the nation at over 9 months. With such low inventory, homes are being listed for about 10.6% higher than this time last year and are selling for over list price. A home in California received over 122 offers in a 2-day period, with offers ranging from the mid $400,000 to one offer that was over $500,000.
Homes are being listed for about 10.6% higher than this
time last year and are selling for over list price.
The housing demand is there, and there is no sign of it slowing down. If you are waiting for home prices to subside before you purchase your next home, don’t expect it to happen anytime soon with the lack of homes available on the market. Home prices will continue their steady climb due to high demand and appreciation.
Next month we dive further into why we don’t see a housing bubble being created due to builder demand, the rising cost of lumber, and supply chain issues.
About the Author
Alec is a loan officer at Assurance Financial Group located in Birmingham, AL.
He was awarded the Rise Award by Freddie Mac for having a big impact on home loan affordability. Alec’s goal is to help families purchase their dream home while saving money and achieving their financial goals.
Alec Priola NMLS #1301248
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