Will the housing market burst?
It’s the question that everyone is asking right now. So much so, that in April Google reported a 2,450% increase in the keyword search “When is the housing market going to crash?”.
But, experts continue to predict the housing market will remain strong.
National Association of Realtors chief economist Lawrence Yun stated this
“…is not a bubble. It is simply lack of supply.”Lawrence Yun
Factors Contributing to Rising Prices
There is a record-low number of homes available for sale. In April 2021, there were just 1.03 million active listings, according to market data.
Compare that number to the more than 4 million homes for sale at the height of the housing bubble in July 2007, and you see that today’s circumstances are different from the housing crash.
Today, rising home prices are largely due to a lack of inventory.
“This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post-pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”Morgan Stanley, Thoughts on the Market Podcast
In addition to a significant decrease in the number of homes for sale, low mortgage rates is another contributing factor to buyer demand and home appreciation.
How 2021 is Different than 2007
Unlike the years leading up to the Great Recession, mortgage lending standards remain tight, which protects buyers by only approving them for a price point they can afford. In addition, homeowners have high equity, so they are not in danger of losing their homes.
If you are thinking about buying or selling in today’s market, contact us to learn more!