Housing Bubble Or NOT?

With every media outlet forcing recession talks down our throats, it may seem like the housing market is on the way down in the near future. All this recession talk is making consumers nervous, and more questions are being raised about another 2008 recession. For those who want to understand what is happening with real estate, it is important to understand what is happening in the real estate market. Experts have made predictions, revised them, and revised them again. Here is why economist are telling you why this is a housing bubble or not.

Housing Bubble or Not? Probably Not…

The housing bubble that we saw in 2008 was a completely different situation than we are seeing today. With many homeowners having lived through the housing bubble, a lot of people are skeptical about the future of the market. According to today’s real estate market experts, Odeta Kushi, deputy chief economist at First American says:

“This is not the same market of 2008. . . . It’s no secret the housing market played a central role in the Great Recession, but this market is just fundamentally different in so many ways.”

According to Natalie Campisi, advisor staff at Forbes, also explains the difference between lending now and then. Here is what she said about the lead up of the housing market crisis:

“Among the differences between today’s housing market and that of the 2008 housing crash is that lending standards are tighter due to lessons learned and new regulations enacted after the last crisis. Essentially, that means those approved for a mortgage nowadays are less likely to default than those who were approved in the pre-crisis lending period.”

Finally, another reason we have and will not see another market like 2008 is the inventory problem. In 2008, there was an oversupply of homes, meaning that the inventory was unable to back up the meteoric rise in home prices. However, in 2020-2022, we are seeing the opposite. We do not have enough housing, and because of that, inventory is able to back up the housing price increase. According to realtor.com,

. . . experts don’t believe the market is in a bubble or a crash is in the cards, like during the Great Recession. The nation is still suffering from a housing shortage that has reached crisis proportions at a time when many millennials are reaching the age when they start to consider homeownership. That’s likely to keep prices high.”

Not A Bubble

This is not a housing market bubble, at least from all the data and lending we have seen. We might be heading for a slowdown, or a slight regression, but a housing market crash is unlikely. With lending standards cleaned up, buyers actually having to prove income and assets, and with appraisals not being cheated, we will likely not see a crash.