Blog > Are We Headed for a Bust?
Elements of today’s housing market feel eerily reminiscent of the market right before the crash of 2007. Some would-be home buyers, along with current homeowners, are wondering if today’s rising prices are indicative of an unhealthy market. After all, there are lots of factors from inflation or labor shortages to a consistently evolving pandemic. Here’s what the experts say!
The simple answer is…. No. Real estate experts don’t anticipate a crash like we saw 15 years ago. The fact is that there are far more people looking for homes right now than are available. This dilemma keeps prices high because buyers are more willing to compete with other buyers in bidding wars.
Instead of a sharp burst that will cripple the market, economists and Realtors alike believe the market will very slowly start to stabilize over time. Record low mortgage rates over the past two years have been a driving force in the market being as crazy as it is. However, already in 2022, we’ve seen rates creep back up to near where they were in pre-pandemic times.
What Does This Mean?
Even just a single percentage point in mortgage rates can increase a buyer’s monthly payment by upwards of $150. That equates to an extra $1,800 a year, a rise that may push buyers back out of the market.
Back in the early 2000s, mortgages were being handed out like candy, even if buyers couldn’t *actually* afford the homes they were buying. When the bubble burst, many people were left with extremely high balances on homes worth a fraction of the price. Today, lenders are extremely judicious with whom they grant mortgages.