Are We In A Housing Bubble?! 2022 Housing Market, Signs To Look For, & How To Prepare As A Homeowner
Is There A Housing Bubble?
As we continue to see home prices and mortgage rates increase, it’s not something to write off. However, while those things may be true, there are several conditions defining today’s market that make us think the answer to this question is no.
What is a housing bubble?
A housing bubble can be defined by a sudden sharp increase in demand matched with significantly low supply causing housing prices to dramatically increase. What is unique about a “housing bubble” is the sudden and abnormal pace at which these spikes occur. The “bubble” pops when supply suddenly catches up with demand and home prices as a result drastically decrease.
No two “housing bubbles” are alike and when they do occur, they are typically short-lasting and recovered from relatively quickly. Many people today may be fearing that we are entering into a situation similar to the 08-09 housing bubble, however, today’s conditions and protections are strong evidence that this is not the case.
Housing and economic experts do not believe that we are currently in a housing bubble poised to pop.
What we have to continue to factor in is the anomaly that was 2020-2021. COVID-19. In 2020, many measures were taken to allow consumers to continue to have strong buying power leading to a severe and unprecedented cut in rates. This resulted in a huge boom in the housing market as buyers found more opportunity to buy than they possibly did before BUT there was still extremely limited supply partially due to people not wanting to allow others in their homes. As we return back to normal, that demand is still present and not going anywhere soon.
While the current market may “look” like a housing bubble, what is truly happening is a return back to pre-pandemic life with a supporting and strong foundation behind it.
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