One of the top rated “Google Searches” for 2021 is “Are we in a housing bubble?”. It’s not surprising that for those of us who were in the housing crash a decade ago, there would be concerns about a repeat. The overall consensus is that NO we are not in a housing bubble and NO there will not be a crash.
WHY? The main difference is that back in 2005-2006 we were actually in a Buyer’s Market. Now hear me out before you go crazy telling me about all the bidding wars and price increases back then (trust me I know all about it as I lived it personally and professionally). We classify a market as a buyer or seller market based on the months of inventory (supply & demand). In 2005 we had a very large supply of resale homes and on top of that new construction home builders were building like crazy dumping more inventory into the market; hence a Buyer’s Market. Couple that with crazy lending practices where people were buying homes at a price point they never really could afford to begin with and voila, recipe for disaster. Market crash occurred.
Today, we are in a Seller’s Market. We have only about a one month supply of homes (balanced market is a 6 month supply of homes). More people are moving to the Valley every day and we don’t have enough homes to support our current population let alone the newcomers. Lending practices are even more strict these days (thanks to COVID) so those who are buying and qualifying for the loans are highly qualified buyers. Low Supply + Highly Qualified Buyers = Not a Crash.
Can we sustain this crazy inflation of prices in our market? Not for long. Does that mean a crash at that point? Also NO. Take a look at the First Half of 2021 Economic Recap in this link for full details and stats as to where we were, where we are predicted to be, and what will happen with our Red Hot Real Estate Market.
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