As homeowners have watched home prices surging over the past year, the question on many people's minds is are those prices about to come crashing down? It's not an easy question to answer, but many experts believe the current market is a boom rather than a bubble.
What's the difference? Bubbles occur when the price of something (such as a house) doesn't reflect its actual worth. The instability of inflated worth means the bubble could burst at any time.
Even before the pandemic turned the real estate market upside down, average home prices had been climbing steadily since 2012. Driven by historically low mortgage rates and the changing needs of working and schooling from home, demand has increased dramatically over the last year.
Meanwhile, housing needs have exceeded new construction in the US by at least 5.5 million units over the past 20 years, according to the National Association of Realtors. Compared to the housing bubble of 2008, when overbuilding was an issue, economists say today's rapidly rising prices reflect actual demand.
Whether or not the housing market bursts in dramatic fashion, booms like these must come to an end sooner or later. If you've been waiting to buy, there are some signs that prices may be beginning to plateau as housing supply increases.
Talk to our team at Harnish Properties about making a plan to buy or sell.
201 B Avenue, Suite 101
Downtown Lake Oswego