Are we headed toward another real estate bubble? To find the answer, we need to compare current market trends to 2007.
Want to sell your home? Get a FREE home value report.
Want to buy a home? Search all homes for sale.
I’ve been getting asked by a lot of people lately if we are currently in a real estate bubble that is about to pop. I’d like to address that topic today and give you some insight on where we are today versus where we were in 2007 when the last bubble burst.
The main reason for the last bubble was that anyone with a pulse could qualify for a mortgage. Lending guidelines are much stricter now, and there are a lot more rules and regulations that make it more difficult to get a mortgage.
Another thing to like right now is our low interest rates. They are so low that some people are concerned that when they inevitably go up, it will severely affect affordability for buyers. However, that hasn’t happened historically.
We have a strong market right now.
In May 1983, interest rates rose from 12.63% to 14.67% in one year. Even though that’s a significant increase, it caused home values to increase as well. We saw similar situations in 1987, 1994, and 2000. Each time, home values increased along with rates and it didn’t cause a bubble. Supply and demand are going to be a big part of this. Ultimately, we are in a strong seller’s market right now with only 1.8 months of inventory.
We definitely have a strong market right now. Nobody has a crystal ball, but I can say for certain we are in a much better situation than we were in 2007. We will start to see a correction soon, but I highly doubt we will see a bubble.
If you have any questions for us, don’t hesitate to give us a call or send us an email. We look forward to hearing from you.
